Renting vs Buying: How to Compare the Monthly Cost
Rent feels simple and buying feels complicated, but the monthly comparison is straightforward once you turn the purchase into a loan payment.
What is the Rent vs Buy Calculator?
Buying is priced as a standard mortgage payment: the loan is the price minus the down payment, repaid over the term at the given rate. That monthly payment is then set beside your monthly rent, so you can see the cash difference each month and which option is cheaper on a purely monthly basis.
How to use it
- Enter the home price, down payment, rate and loan term.
- Enter the monthly rent for a comparable place.
- Press Calculate to compare the buy payment with the rent.
Worked example
Home price 200000, down payment 40000, rate 5%, term 25 years, rent 1000 per month: buy monthly payment about 935.34, rent 1000, buying is cheaper by about 64.66 per month on this monthly comparison.
Is buying always cheaper than renting in the long run?
No. Buying can be cheaper per month yet still cost more overall once you add maintenance, taxes, insurance and the cost of selling. Renting can also win if you move often or if prices fall. Use the monthly comparison as a starting point, then weigh how long you plan to stay and what else ownership will cost.
Frequently asked questions
Does cheaper monthly mean better overall?
Not necessarily. Buying builds equity and can gain value, but it also brings maintenance, taxes and selling costs that rent does not. This tool compares monthly cash only.
Why is the buy payment sometimes lower than rent?
A large down payment, a low rate or a long term can all push the mortgage payment below rent, especially where rents are high.