Spreadsheet
Rent vs Buy Calculator
Buying is not a decision with a right answer. It is a trade with a break-even year. This finds yours.
Download the calculator
Opens in Microsoft Excel, Google Sheets, Apple Numbers, and LibreOffice Calc. To use it in Google Sheets, upload the file to Drive and open it with Sheets.
What most calculators get wrong
Almost every rent-versus-buy calculator credits the renter with investing their monthly surplus, and stops there. But a mortgage payment is fixed while rent rises, so after some number of years the owner is the one with money left over.
Leaving that out is not a rounding error. It is how a calculator quietly produces whichever answer its author preferred, and it always favors renting. This file invests both surpluses at the same rate. That single change is the reason it exists.
The hole you start in
On the example that ships in the file: a $450,000 home with 20% down
- Round trip transaction cost
- $42,750
- As a share of the deposit
- 48%
- Years of appreciation to cover it
- 2.7
2.5% going in and 7.0% coming out, the second paid on the whole value of the home rather than on your equity. Appreciation has to dig you out of that before a dollar of equity is real.
What is inside
- Your Numbers, sixteen inputs covering both sides: price, deposit, rate, term, closing and selling costs, property tax, insurance, maintenance, HOA, appreciation, rent, rent growth, renters insurance, investment return and horizon.
- Year by Year, thirty rows showing home value, mortgage balance, each side's annual cost, each side's invested surplus, and the resulting net worth. You can follow the whole comparison rather than take an answer on trust.
- The Answer, the break-even year plus the gap at five, ten and thirty years.
- Every output is a live formula. Change one input and the whole comparison moves.
Four numbers decide it
Home appreciation, the mortgage rate, what the same home rents for, and what the renter earns on invested money. Across plausible ranges for those four, the break-even moves from about four years to never.
Which is why a rule of thumb is useless here and a calculator is not. Anyone confident that buying is obviously better, or obviously worse, is telling you about their assumptions rather than about houses.
Two things to be honest about
Use the rent for the same home. Not a cheaper one you would tolerate. Comparing a house you want to buy against an apartment you would put up with is the most common way people get the answer they already wanted.
Ask whether you would really invest the difference. The file assumes the renter invests every month for decades without touching it. A mortgage is a forced savings plan with a bank enforcing it. If the realistic alternative is spending the difference, buying wins in most scenarios and the arithmetic is answering a question you were never facing.
What it deliberately does not do
It does not price security of tenure, painting a wall, or not having a landlord sell the place out from under you. Those are real and they are not irrational. They are simply not financial, and putting a lifestyle preference into financial language is how people talk themselves into bad trades. Do the arithmetic first, then decide separately what the rest is worth to you.
It also omits the tax treatment of mortgage interest, which most filers no longer itemize for, and the capital gains exclusion on a primary residence, which is genuinely valuable for long holders. The first omission is conservative toward renting, the second toward buying.
Found an error, or think a calculation should work differently? Tell me. Corrections get published with a date attached, the same as they do for the research reports.