What each side costs every month, and where you stand after ten years.
Over ten years
Enter the rent and the house price to compare the two.
Net cost is money you have spent and cannot get back. Renting is a straight cost; buying counts everything you paid, minus the equity you would own after ten years. Closing costs, selling fees and any investment return on the down payment are left out.
There is no answer that holds for everyone, because it depends on the numbers you type in and on how long you stay. What this page does is put both sides on the same ten years: the same rent, the same house, the same horizon. If the big figure above says buying costs more, then at these numbers and over this period the rent is the better deal. Change the house price, the rate or the rent rise and the answer can flip, which is exactly why the boxes are there.
Longer than most people assume. Buying front-loads a large cost that renting never has — the down payment — and the early years of a mortgage are mostly interest, so the equity builds slowly at first. On a 30-year loan at 6%, after ten years the balance is still roughly four fifths of what you borrowed. That is why the ten-year comparison above can favour renting even when the monthly figures look close: the rent side has no lump sum to recover. Short stays generally favour renting; the further out you push the horizon, the more the mortgage payment turns into equity rather than interest.
Because the loan is not interest-free. The monthly payment is set so the loan reaches zero exactly at the end of the term, and it is split differently every month: early on almost all of it is interest, later on almost all of it is principal. That split is why two loans with the same payment and the same term can leave you owing very different amounts after ten years. Put the rate at zero and the payment becomes the simple price-minus-down-payment divided by the term, which is a useful way to see how much of the payment is interest.
No. The down payment leaves your bank account, so it belongs in the cash-out figure, but it is not money you have lost — it becomes the part of the house you own outright. That is why the net cost of buying above is your total cash out minus the equity you would hold after ten years. Treating the down payment as a cost would make buying look far worse than it is, and leaving it out of the cash-out figure would make the move-in bill look far smaller than it is.
Four things, and they do not all point the same way. Not included against buying: closing costs at purchase and agent fees when you sell, both of which are real and are usually several percent of the price. Not included against renting: the investment return the renter could earn on the money they did not tie up in a house — if you would genuinely invest the down payment, renting is better than this page shows. Not included for either side: moving costs, and any tax relief on mortgage interest, which depends on where you live and is ignored here. Also not included: renters insurance and mortgage insurance, and the fact that property taxes and upkeep tend to rise over ten years while this page holds them flat.
The rate you were actually quoted, not an average you read somewhere. The quoted number is usually a nominal annual rate, and that is what this page wants. Small changes matter more than people expect on a large loan: on a 300,000 mortgage over 30 years, half a percentage point moves the monthly payment by roughly 90, and it moves the balance you still owe after ten years by several thousand. If you are comparing two lenders, run each one's rate through the boxes separately rather than averaging them.
Yes, if you can, because a mortgage payment is not the whole bill and the difference is often large enough to change which side wins. A common rule of thumb is about one percent of the price per year for property tax and about one percent per year for maintenance, but both vary so widely by area and by age of building that you should use a real figure from your own area whenever you have one. Upkeep in this page is a flat monthly amount, so it covers repairs, insurance and any building or association fee you pay. Leave both at zero and the comparison silently flatters buying.
This page stops there because ten years is the horizon it is asked to compare. After that the mortgage keeps running, the equity keeps growing, and the rent keeps being paid. If you are still in the house at the end of the term you own it outright and the monthly cost drops to taxes and upkeep; if you sell earlier you hand over agent fees and any outstanding loan at once. The ten-year figure is a snapshot of the crossover point, not a verdict on the whole life of the decision.