Rent vs Buy Calculator

Should you rent or buy a home? Use our simple rent vs buy calculator to find out which option is best for you.
If you stay in your home for 3 years, renting is cheaper than buying
You’ll save $563 per month and $20,273 in total
TOTAL COSTYEARS$450k$225k$024681012141618202224262830
Your cost breakdownRENTBUY
Monthly cost$1,024$1,587
Total cost$36,850$57,123
Good news. Nerdwallet can help you with your goal of buying a home
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How to use the Rent vs. Buy Calculator

If you’re deciding between renting and buying a home, the choice isn’t just about money. But either way, you’ll have to start with some math.

To use our Rent vs. Buy Calculator, you’ll need a few pieces of basic information. If you don’t know a specific number, we can help you estimate. Start by filling in:

  • Where you want to live (city and state).

  • The home’s purchase price. (Not sure? Use NerdWallet’s Home Affordability Calculator to see how much house you can afford.)

  • Your down payment. (Get an estimate using our down payment calculator.) 

  • The term of your mortgage. (A 30-year fixed-rate mortgage is most common.)

  • How long you think you’ll live there.

  • The monthly cost of renting in the same area.

To make things easy, we pre-filled a number of assumptions. These are typical costs that factor in to the rent versus buy question. For example, we assume:

  • Your security deposit for renting is equal to one month’s rent.

  • Your house down payment is 20%. (This is higher than the average down payment on a house, but the amount at which you won’t have to pay mortgage insurance.)

You can use our assumptions as a ballpark, or adjust the numbers to exactly what applies to you.


The Rent vs. Buy Calculator factors in the upfront and recurring costs of renting and buying to compute and refine results. (These costs are detailed below.)


We included ongoing payments for rent and renter’s insurance and a one-time security deposit.


To calculate the cost of owning a home, we included the two biggest upfront costs: closing costs and the down payment.

For recurring costs, we included:

  • Property taxes.

  • Homeowners association (HOA) fee, which may or may not apply.

  • Homeowners insurance.

  • Private mortgage insurance (PMI), which you pay if your down payment is less than 20% on a conventional mortgage.

  • Home repairs and maintenance.

  • Home renovations.

Your result assumes you’ll deduct on your taxes the costs for mortgage interest, PMI and property tax, and that your marginal income tax is 25%. It also assumes you’ll allocate 0.5% of your home’s value annually for home repairs, and another 0.5% of your home’s value annually for renovations. (NerdWallet recommends setting aside 1% to 2% of your home’s value per year to budget for home repairs and renovations.) You can adjust all of those pre-filled areas.

The Rent vs. Buy Calculator accounts for the accumulation of equity from mortgage payments and the effect of growth or decline in home prices. It factors in any long-term capital gains. The calculator also bakes in the opportunity cost of using savings for a rental deposit and a down payment instead of investing the money.

What factors should you consider when deciding whether to rent or buy?


Home prices and monthly rent vary depending on an area’s overall cost of living. Where you choose to live may decide the buy versus rent question for you. For example, in high-priced real estate markets like San Francisco, renting might be your only affordable option. (If you’re deciding between cities, NerdWallet’s Cost of Living Calculator can help you compare.)

Other important factors when deciding where to live include safe neighborhoods, good schools, proximity to public transportation, walkability, and drive times to work, shopping and recreation.

Also consider the supply of rentals or homes in your desired area: Are they appealing, plentiful and affordable? Style — of a home, an apartment, a town or a neighborhood — plays a role, too.

Lifestyle factors

Some pieces of the rent versus buy decision are not easily quantifiable, but they could be the most important. When weighing your choices, consider which of these factors matter most in your life right now:

  • Where you want to live: Buying a house means putting down roots and committing to staying in one place for a while. If you have your heart set on living in a big city, though,  buying might be financially out of reach. Renting presents a more affordable way to get you there. 

  • Flexibility: Renters can simply relocate at the end of a lease term, whereas homeowners have to budget time and money to sell a house

  • Financial predictability: If you decide to renew a lease, your landlord could raise the rent. With a fixed-rate mortgage, your monthly payment remains the same. You’ll also grow home equity that you can borrow against. 

  • How you want to spend time and money: There’s a deep sense of pride that comes with maintaining your own home, but it comes at a cost: Your free time and cash. Renters don’t have to arrange or pay for repairs or renovations; that’s the landlord’s job. Renters also don’t have to pay property taxes and typically have lower insurance and utility bills.

  • Personalizing your space: When you own a home, you have freedom to renovate and design to suit your taste. That’s still sometimes possible when you rent, but it depends on the terms of your lease.

Costs of a home purchase

The upfront cost of buying a home is the biggest barrier for many would-be buyers. In addition to a down payment, you’ll need to save for closing costs, which will run you about 2% to 6% of the loan amount.

Costs of owning

You can’t put your wallet away once you’ve bought your new home. You’ll keep paying mortgage insurance (if it applies), property taxes, homeowners insurance and HOA dues (if they apply). And then there are repairs, upkeep and the cost of furnishing and upgrading your new place.

Is renting always cheaper?

There’s no single answer to the question “Should I rent or buy?” Some cost factors are out of your control, like the direction of the housing market, interest rates, property tax increases and returns on investment. Either way, you have to think about how you want to build strong, healthy finances for the long haul.

Whether renting is cheaper depends on whether renters invest what they would have spent on a down payment and any savings they accrue from renting each month. Homebuying costs more upfront, but you can get some of that back (and potentially more) when you sell the home. To match or exceed a home buyer’s return on investment, renters must invest, not spend, those savings.

When comparing the two options, renting can often come out ahead, at least compared to the early years of a home purchase. But like the tortoise racing the hare, owning a home is more “slow and steady,” a marathon instead of a sprint. The virtues of buying grow when you stay in a home for a while. As the years pass and your home’s value and home equity have a chance to build, less of each mortgage payment is used to pay off interest and more goes toward your principal.