Mortgage vs Rent Calculator
The buy vs rent decision is not simply "mortgage payment vs monthly rent." The real comparison includes maintenance costs, property tax, mortgage interest, the opportunity cost of your down payment, home appreciation, and the wealth you could build by investing the difference instead. This calculator runs the full analysis — not just the monthly numbers.
Educational estimate. Calculator results are for planning and information only, not financial, tax, medical, legal, or engineering advice. Verify important decisions with official sources or a qualified professional.
Mortgage vs Rent Calculator
True 10/20/30-Year Cost of Buying vs Renting
📐 Formula & Method
Total Cost of Buying
Mortgage payments (principal + interest) accumulate over the comparison period. Property tax and maintenance are added as ongoing costs. Equity built (principal repaid + appreciation) is subtracted as wealth gained.
Total Cost of Renting
Rent payments grow each year at the rent increase rate. The down payment and any monthly difference between buying and renting costs is assumed to be invested in the market at the investment return rate. The ending portfolio value is subtracted as wealth gained.
Net Worth Comparison (the real measure)
Rather than just comparing costs (which ignores wealth building), the calculator compares net worth: the equity in the home after N years vs the investment portfolio built while renting.
📋 How to Use
-
1
Enter the home purchase price and your planned down payment percentage.
-
2
Enter the current mortgage interest rate and term (30 years is standard in the US; 25 years in the UK).
-
3
Enter the monthly rent for a comparable property and the expected annual rent increase.
-
4
Set home appreciation (4% is a reasonable US average; 5-7% for UK) and investment return (7% for a diversified equity portfolio).
-
5
Enter your comparison period — how many years you plan to stay. Below 5 years usually favours renting; above 10 usually favours buying.
-
6
Enter local property tax rate (US ~1.1%; UK council tax is usually flat — set to 0 and add it to your monthly rent figure) and annual maintenance (1% rule).
-
7
Click Calculate to see the full 10, 20, and 30-year comparison.
Buying vs Renting: What the Numbers Actually Show
The most important variable in the buy vs rent decision is how long you plan to stay. In most US and UK markets, buying becomes financially superior to renting somewhere between 5 and 12 years — this is called the "break-even horizon." Before that point, the transaction costs of buying (stamp duty, closing costs, agent fees on sale) haven't been amortised, and the investment portfolio you could have built while renting may be worth more than your home equity.
The "monthly payment vs rent" comparison that most people use is deeply misleading. It ignores: (1) the opportunity cost of the down payment — that money could be earning 7-10% in the stock market; (2) the ongoing costs of homeownership — property tax (~1.1% of value in the US annually), maintenance (~1% rule), insurance, and HOA fees typically add 2-3% of home value per year on top of the mortgage; (3) the wealth-building effect of home equity and appreciation over time.
In the US, the median home price is approximately $420,000 (2024). A 20% down payment ($84,000) invested in the S&P 500 at a 7% real return would grow to $165,000 in 10 years and $330,000 in 20 years — before making a single additional contribution. This opportunity cost is the strongest argument for renting in expensive markets, particularly when rent is significantly below the total cost of ownership.
In the UK, the picture is different because of several factors: the lack of 30-year fixed rates (UK mortgages typically reprice every 2-5 years), higher stamp duty on properties above £250,000, and historically stronger house price appreciation in many regions (especially London and the South East). The UK also has no equivalent to the US mortgage interest tax deduction — interest relief for residential mortgages was fully withdrawn in April 2020.
The true financial comparison is between net worth, not costs. After N years, a buyer's net worth from the property is (home value − remaining mortgage balance). A renter's net worth from the same money is their investment portfolio value. The calculator computes both and tells you which path creates more wealth over your time horizon.
🔬 Methodology & Accuracy
Formula: Uses the standard mathematical formula shown in the Formula & Method section above. All computations run client-side in your browser — no data is sent to our servers.
Data sources: Tax bands, contribution limits and regulatory rates are taken from official US (IRS, SSA) and UK (HMRC, gov.uk) publications for the current tax year, and updated when bands change.
Last reviewed: June 2026 · Accuracy: Results are precise to two decimal places using IEEE-754 double-precision arithmetic. Intended for educational and planning use only.
For informational purposes only. Results are estimates based on the inputs and formulas provided. For financial, tax, medical, or legal decisions, consult a qualified professional. Rates and regulations change — always verify current figures with official sources.