Rent vs Buy: The 5-Year Math
Whether renting or buying is cheaper depends on how long you stay, what your down payment could earn if invested, and the true costs of ownership. This calculator compares the full 5-year cost of each path, including opportunity cost, closing costs, maintenance and selling expenses. Enter your numbers to see which option leaves you ahead.
Renting and buying
Your assumptions
—
by $0 over 5 years
Renting- Rent paid
- $0
- Gain on the invested deposit
- $0
- Net cost of renting
- $0
- Payments, tax, insurance, upkeep
- $0
- Home value at exit
- $0
- Cost to sell
- $0
- Equity you walk away with
- $0
- Net cost of buying
- $0
Every growth rate here is your assumption, not a forecast. Selling costs and the return you could have earned on the deposit are both counted, because leaving them out is what makes buying always look like the winner.
What the Comparison Includes
On the renting side, the calculator tracks monthly rent, renter's insurance and an assumed annual rent increase that you set. On the buying side, it counts your mortgage payment (PITI), maintenance, HOA if applicable, closing costs at purchase, and projected selling costs when you leave — typically around 6% of the sale price for agent commissions and transfer taxes.
The critical addition is opportunity cost. Your down payment and closing costs represent cash that could earn a return if invested instead of locked in a house. The calculator applies the investment return rate you enter to that cash pool and adds the projected earnings to the renting column. This is the factor most rent-vs-buy tools leave out, and it is the one that most often tips the comparison. On a $360,000 home with 10% down, the $36,000 down payment plus $12,000 in closing costs is $48,000 that could be working for you in an investment account if you rented instead.
The Costs That Rent-vs-Buy Tools Usually Miss
Many homeowners on personal-finance forums report that maintenance alone costs 1% to 2% of the home's value per year — a roof, a furnace, a plumbing emergency. On a $360,000 home, that is $3,600 to $7,200 annually, none of which builds equity. Selling costs are another blind spot: if you sell after five years and pay 6% in commissions and fees, that is roughly $22,000 on a $360,000 home (more if values have risen), deducted straight from your proceeds.
Rent increases are the main risk on the other side. If rent rises faster than you assumed, the renting column grows. The calculator lets you adjust the annual rent-increase rate to stress-test this. A common five-year rule of thumb emerges from most scenarios: if you plan to stay less than five years, renting often wins once selling costs and opportunity cost are included. If you plan to stay much longer, buying usually pulls ahead because mortgage payments are partially building equity while rent payments are not. Your specific numbers, entered above, tell the real story.
This comparison is sensitive to your assumptions about home appreciation, rent increases and investment returns. Run multiple scenarios to see how the result changes.