Rent vs Buy Calculator
Compare buying a home against renting and investing the difference, year by year.
For a more comprehensive analysis — including affordability, a mortgage rate stress test, and inflation-adjusted purchasing power — see Buy vs Rent: Full Financial Analysis.
How the comparison works
Buying is modeled as paying the down payment, then a fixed mortgage payment every month — net worth is the resulting home equity, with no appreciation assumed since it isn't a given input. Renting is modeled as keeping the down payment invested from day one, and investing the monthly difference between the mortgage payment and rent (or drawing on it, if rent is higher) at your investment return rate. Both start at the same net worth — the down payment — so any gap that opens up over time is a genuine result of the two paths diverging, not a head start either way.
With this calculator's defaults — a £400,000 home, £80,000 down, 6.5% mortgage rate against £2,000 monthly rent — the result is sensitive to the gap between the mortgage payment and rent, and to how aggressively that gap is invested. A quick market-level sanity check is the price-to-rent ratio (home price ÷ annual rent): here that's 400,000 ÷ 24,000 ≈ 16.7, in the middle ground where the detailed comparison above matters more than a rule of thumb. For the mortgage payment itself, see the Mortgage calculator, for a broader affordability check against local incomes, see the House Price to Income calculator, and to see what a landlord would need to charge to make the equivalent property profitable, see the Rental Yield calculator.
Frequently asked questions
- What does this calculator include?
- Mortgage principal and interest for buying, and rent for renting. It doesn't model property tax, insurance, maintenance, closing costs or home appreciation, since none of those are inputs — treat the result as a starting point, not a complete financial plan.
- What does the renter's net worth actually represent?
- The down payment invested from day one, plus the monthly difference between the mortgage payment and rent invested every month after (or withdrawn from, if rent is higher), growing at your investment return rate.
- What does the buyer's net worth represent?
- Home equity — the home price minus whatever is still owed on the mortgage. No appreciation is assumed, so equity only grows through paying down the loan.
- What happens once the mortgage is paid off?
- If your comparison horizon is longer than the mortgage term, the buyer's equity stays at the full home price from then on, and the renter's portfolio is drawn down by the full rent each month with nothing left to offset it against.
- What does "break-even year" mean?
- The first year buying's net worth catches up to and overtakes renting's. If it's blank, renting stays ahead for the entire period you compared.
- Can I use this in my own app?
- Yes — every calculator on Stupidly Clever has a matching REST API and MCP tool that runs the same underlying logic.
- What is the price-to-rent ratio and what does it tell me?
- Divide the property purchase price by the annual rent for an equivalent property. A ratio below 15 generally favours buying; above 20 generally favours renting. It's a quick market-level signal, not a substitute for running the full numbers with your specific mortgage terms, tax situation, and investment alternatives.