BCBetter Calculators

Rent vs Buy Calculator

Compare the total 5-year cost of renting versus buying a home.

🧮

Enter your values and click Calculate

How It Works

Buying net cost is calculated as: down payment + closing costs (estimated at 3% of home price) + 5 years of monthly mortgage payments (principal and interest only, using the standard amortisation formula) + maintenance costs (estimated at 1% of home value per year) + property tax (estimated at 1.2% per year) − total equity gained. Equity gained equals the principal repaid through mortgage payments plus the appreciation in home value over five years, calculated by compounding the home price at your chosen appreciation rate. Renting net cost equals five years of rent payments (grown annually at your specified increase rate) plus the opportunity cost of the down payment — modelled as the return that capital would have earned if invested at 6% per year instead. The comparison is a useful approximation; it does not include PMI, HOA fees, home insurance, or transaction costs when selling.

Examples

$400k home, 20% down, 7% mortgage, $2,000/month rent
A common scenario in a mid-cost city with moderate appreciation.
Result: Results vary by appreciation assumption — try adjusting the home appreciation rate.
High-cost city scenario
$700,000 home, 10% down, 7.5% mortgage, renting for $3,200/month.
Result: Large down payment opportunity cost and high mortgage often favour renting over a short 5-year horizon.
Affordable market — strong case for buying
$250,000 home, 20% down, 6.5% mortgage, renting for $1,400/month.
Result: Lower home price and modest rent often tip the balance toward buying within 5 years.

Frequently Asked Questions

Why is the 5-year timeframe used?
Five years is a common rule of thumb for the minimum holding period to recoup buying transaction costs. Shorter periods typically favour renting; longer periods often favour buying.
What is opportunity cost of the down payment?
If you didn't buy, your down payment could be invested. This calculator assumes a 6% annual return on that capital as the renting opportunity cost.
Does this include PMI?
No. If your down payment is below 20%, add ~0.5–1% of the loan amount per year to the buying costs for a more accurate picture.

Related Calculators

finance💰

Down Payment

Calculate the down payment amount, loan amount needed, and LTV ratio for any purchase price.

Calculate →
finance💰

Car Loan

Calculate your monthly car loan payment, total interest, and total cost.

Calculate →
finance💰

Loan Interest

Calculate total interest paid and total cost for any fixed-rate loan.

Calculate →
finance💰

Savings Goal

Find out how much you need to save each month to reach any financial goal by a specific deadline, with or without interest.

Calculate →