Rent vs Buy Decision Calculator

Work out rent vs buy decision instantly with clear inputs, formula shown and shareable results.

About Rent vs Buy Decision Calculator

The price to rent ratio divides the purchase price by twelve months of rent, and monthly ownership cost applies the interest rate plus running costs to the price. Ratios below 15 have historically favoured buying and above 20 favoured renting, though the result also depends heavily on how long you stay.

Formulas

Price to rent ratio

ratio = purchase price / (monthly rent x 12)

Monthly ownership cost

cost = price x (interest rate + running cost rate) / 12

Worked example

With the default values below, Rent vs Buy Decision Calculator returns Price to annual rent ratio of 20.83. Change any input above and every figure here is recalculated in your browser.

Inputs used

Monthly rentminimum 0.01: 1,400
Purchase priceminimum 0.01: 350,000
Mortgage interest rateaccepts 0.01–20 %: 5 %
Annual maintenance, tax and insuranceaccepts 0–10 %: 1.5 %

Results

Price to annual rent ratio: 20.83
Monthly cost of ownership: $1,895.83
Monthly difference against renting: $495.83
Indication: Renting looks favourable on this ratio

Step by step

1Values used
2Price to rent ratio
3Monthly ownership cost
4Price to annual rent ratio= 20.83
5Monthly cost of ownership= 1,895.83
6Monthly difference against renting= 495.83
7Indication= Renting looks favourable on this ratio

Assumptions and limits

The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation into account.
Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
A simplified comparison that ignores capital growth, transaction costs and tax treatment. Not financial advice.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

A simplified comparison that ignores capital growth, transaction costs and tax treatment. Not financial advice.

Frequently Asked Questions

How is the Rent vs Buy Decision figure worked out?

ratio = purchase price / (monthly rent x 12). The price to rent ratio divides the purchase price by twelve months of rent, and monthly ownership cost applies the interest rate plus running costs to the price.

Why does this matter?

Ratios below 15 have historically favoured buying and above 20 favoured renting, though the result also depends heavily on how long you stay.

What do I need to enter?

Enter monthly rent, purchase price, mortgage interest rate, annual maintenance, tax and insurance. The defaults shown are a realistic worked example — swap in your own figures to get a result you can use.