Should you rent or buy? Compare the true 5-year cost of both, including rent growth, home appreciation and the equity you build.
Net cost of buying = down payment + closing costs + 5 years of payments, tax, insurance and maintenance, minus the equity you own after 5 years. Selling costs are not included.
The rent-vs-buy debate is usually framed as “rent is wasted, mortgages build wealth” — but the first years of a mortgage are mostly interest, tax, insurance and maintenance, none of which builds wealth either. This calculator puts both options on equal footing over five years. Renting totals every rent cheque, grown each year by your assumed increase. Buying totals everything you pay — down payment, closing costs, mortgage payments, tax, insurance, maintenance — then subtracts the equity you actually own at the end (the appreciated home value minus the remaining loan balance).
Three assumptions dominate the result. How long you stay: buying usually wins over 7–10 years because the large upfront costs spread out; over 2–3 years renting usually wins. Price growth vs rent growth: fast-appreciating markets favour buying, fast-rising rents punish renting. Interest rates: higher rates mean more of each mortgage payment goes to the bank rather than your equity. Try the extremes — 0% appreciation, or a 6% rent increase — to see how sensitive your decision is.
No five-year model captures everything. Selling a home typically costs 5–6% in agent fees in the US (1–3% in the UK), which can erase buying’s advantage if you move soon after. Renters, meanwhile, keep their down payment invested — this calculator does not credit that investment growth, which flatters buying slightly. Treat the verdict as a strong signal, not a final answer, and weigh the non-financial factors too: flexibility, stability and how much you value making a place your own.
It depends on your timeline, local prices and rates. As a rule of thumb, buying usually wins if you stay 7–10+ years; renting often wins for shorter stays because closing and selling costs are so high.
A popular shortcut: multiply the home price by 5% — that approximates the unrecoverable annual cost of owning (interest, tax, maintenance). If annual rent is well below that number, renting is likely cheaper.
No. Selling typically costs 5–6% of the price in the US (1–3% in the UK). If you expect to move soon after the 5-year window, buying looks worse than shown.
Strongly. Appreciation builds equity without any extra payment from you, so higher assumed growth favours buying. Be conservative — long-run real appreciation is only about 1–2% above inflation in many markets.
A fair point: renters can invest what would have been a down payment. This calculator does not model that, so it slightly favours buying. If you are a disciplined investor, renting can look better than shown.
There is no universal answer — it depends on your timeline, local prices and current mortgage rates. As a rule of thumb, buying usually wins if you will stay put for 7–10 years or more, because large upfront costs (down payment, closing fees and eventually selling fees) spread out over time. Renting usually wins for shorter stays, or where home prices are very high relative to rents. Enter your own numbers above — especially how long you plan to stay — and let the five-year comparison decide.