Rent vs Buy Calculator

How this is calculated

⚠️ THE ANSWER IS DECIDED BY ASSUMPTIONS, NOT BY ARITHMETIC. This is the honest headline. On the defaults here — a $350,000 home, 20% down, 6.5%, seven years — buying comes out ahead by only a few thousand dollars. That is a rounding error on a $350,000 decision, and it flips completely if appreciation runs at 1% instead of 3%. Anyone with a confident answer to rent-versus-buy has smuggled in a forecast. WHAT THE TOOL COMPARES: total cash out minus what you get back. For buying, that is the deposit, closing costs, every mortgage payment, and taxes, insurance and maintenance — less the net sale proceeds after selling costs and paying off the remaining balance. For renting, it is all the rent paid, less the investment growth on the deposit you did not spend. THAT LAST PART IS THE ONE PEOPLE LEAVE OUT. A renter is not merely someone who failed to buy — they are holding a deposit that can be invested. On these defaults, $80,500 of deposit and closing costs growing at 5% for seven years earns $32,772, and ignoring that makes renting look far worse than it is. If your deposit is actually sitting in a current account earning nothing, set the return to 0 and see the difference honestly. ⚠️ APPRECIATION IS THE WHOLE MARGIN. At 3% a year, a $350,000 home gains $80,456 over seven years. That single figure is more than twenty times the advantage the calculator reports. So the entire result rests on the input nobody can forecast — and if you take one thing from this page, take that. Set appreciation to 0 and watch what happens; that is not a pessimistic scenario, it is a completely ordinary one over a seven-year window. MAINTENANCE IS REAL AND IT IS RELENTLESS. The 1% of value per year used here is the common rule of thumb, and it is a rule of thumb rather than a measurement — an old house eats more, a new one less, and neither is smooth. It arrives as a roof, not as a monthly bill. TRANSACTION COSTS ARE WHY TIME MATTERS. You pay roughly 3% to buy and 6% to sell, so a round trip costs about 9% of the value before anything else happens. That is why buying tends to lose over short horizons regardless of the market — the costs are front-loaded and the equity is not. Move the years input to see where the crossover sits for your numbers. WHAT IS NOT MODELLED: PMI if your deposit is under 20%, the mortgage interest deduction, HOA fees, rent controls, the cost and disruption of moving, and every non-financial consideration — which for most people are the ones that actually decide it. A calculator cannot price security of tenure, or being able to keep a dog, or living somewhere you can paint the walls. TAXES AND MAINTENANCE GROW WITH THE HOUSE here, since they are charged as a percentage of value and property is reassessed. Rent grows at its own rate. Both are geometric sums, and at a 0% growth rate the formula falls back to a straight multiplication rather than dividing by zero.

Common questions

Is it cheaper to rent or buy?

On these defaults — a $350,000 home with 20% down at 6.5%, against $2,000 rent, over seven years — buying comes out ahead by a few thousand dollars. Which is to say: it is a tie. That gap is a rounding error on a $350,000 decision, and it reverses entirely if you change one assumption. The genuinely useful output of this calculator is not the number, it is watching how far the number moves when you touch the appreciation input.

Why does appreciation matter so much?

Because it is bigger than everything else the calculation is weighing. At 3% a year a $350,000 home gains $80,456 over seven years, and the advantage the tool reports is a few thousand — so the appreciation figure is more than twenty times the size of the answer it is producing. That means the whole result is resting on the one input nobody can forecast. Set it to 0 and look at what happens; that is not a doom scenario, it is an entirely ordinary seven-year window.

Why does the renter get investment growth?

Because a renter is not simply someone who failed to buy — they are holding a deposit that can be invested. On the defaults, $80,500 of deposit and buying costs growing at 5% for seven years earns $32,772, and leaving that out is the commonest way rent-versus-buy comparisons get rigged in favour of buying. If your deposit would genuinely sit in a current account earning nothing, set the return to 0 — but make that an honest choice rather than an accidental one.

Why does how long I stay matter so much?

Because transaction costs are front-loaded and equity is not. You pay roughly 3% to buy and 6% to sell, so a round trip costs about 9% of the value before anything else has happened. Over a short horizon there is no time for appreciation or principal repayment to cover that, which is why buying tends to lose over one to three years almost regardless of the market. Move the years input to find where the crossover sits for your numbers — that crossover is the real answer to the question.

Is 1% a year the right maintenance figure?

It is the common rule of thumb, and it is a rule of thumb rather than a measurement. An older house eats considerably more; a new build eats less for a while and then catches up. The more important thing about maintenance is that it does not arrive as a smooth monthly bill — it arrives as a roof, a boiler, or a leak, in a lump, usually at a bad time. Budgeting it monthly is right; expecting to spend it monthly is not.

What is not included?

PMI, if your deposit is under 20% — which would make buying worse. Any mortgage interest deduction, which would make it better. HOA fees, rent controls, and the cost and disruption of moving. And every non-financial factor, which for most people are the ones that actually decide it. No calculator can price security of tenure, being allowed to keep a dog, or living somewhere you are permitted to paint the walls.

Does the mortgage term change the answer?

Less than you would expect over a short stay, and this surprises people. A longer term lowers the monthly payment but repays less principal, so more of what you paid goes to interest and less to equity — and over seven years those two effects largely cancel in the net-cost comparison. The term matters enormously over the full life of the loan; it matters much less to a seven-year rent-versus-buy question. Time in the property is the input to worry about.

So how should I use this?

As a sensitivity test rather than an oracle. Put in your real numbers, note the answer, then change appreciation to 0 and to 5% and see the two results. Then move the years. If buying wins across all of those, buying probably wins. If the answer flips — which it usually does — then the financial case is genuinely a coin toss, and you are free to decide on the things that actually matter to you instead. That is a much better outcome than a false precision.

Take it further with AI

Copy this into ChatGPT or Claude with your own numbers filled in. It hands over the figures this calculator worked out, so the answer is built on real arithmetic instead of a guess.

I used the Rent vs Buy Calculator at https://www.bfcbrilliance.com/tools/rent-vs-buy-calculator.

What I entered:
- Home price ($): ___
- Deposit ($): ___
- Mortgage rate (%): ___
- Mortgage term (yr): ___
- How long you stay (yr): ___
- Rent ($/mo): ___
- Rent rises by (%/yr): ___
- Home appreciation (%/yr): ___
- Return on the deposit if invested (%/yr): ___
- Property tax (%/yr): ___
- Insurance (%/yr): ___
- Maintenance (%/yr): ___
- Buying costs (%): ___
- Selling costs (%): ___

What it calculated:
- Buying is ahead by: ___
- Net cost of buying: ___
- Net cost of renting: ___
- Mortgage payment: ___
- Rent paid over the period: ___

Use those figures as given — they are already worked out, so please don't recalculate or estimate your own. Help me turn them into a plan: what to buy or do, in what order, roughly what it should cost, and the mistakes people most often make with this job.

Keep this general and do not give financial advice — flag where I should talk to a qualified adviser.

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