Rent vs Buy Calculator

How the rent vs buy comparison works

Renting and buying look similar month to month — until you add up everything else. The calculator compares two totals over the same time horizon. Total cost of renting = monthly rent grown by annual rent inflation, plus renter's insurance. Total cost of buying = down payment + closing costs + monthly mortgage payments + property tax + insurance + maintenance, minus the equity you build and any home-value appreciation. Buying wins when its net cost (costs minus equity gained) falls below the cost of renting.

The quick rule: the price-to-rent ratio

Divide the home's price by the annual rent of a comparable place: ratio = home price ÷ annual rent. Below about 15, buying usually wins; above about 20, renting usually wins; between 15 and 20, the details decide. It is a shortcut, not a verdict — the calculator refines it with your actual mortgage rate, taxes, and time horizon.

Worked example

A SAR 900,000 apartment versus renting a similar one for SAR 3,500/month (SAR 42,000/year). Price-to-rent ratio = 900,000 ÷ 42,000 ≈ 21.4 — leaning toward renting. Now the full math over 5 years with 20% down (SAR 180,000), a 5.5% mortgage, and flat prices: buying costs about SAR 180,000 down + SAR 265,000 in mortgage payments + ~SAR 45,000 maintenance — SAR 490,000 in total outlay — while paying the loan down builds roughly SAR 257,000 of equity. Net buying cost: about SAR 233,000. Renting the same home for 5 years at 3% annual rent growth costs SAR 42,000 + 43,260 + 44,558 + 45,895 + 47,271 = about SAR 223,000. Renting wins — the unrecovered closing and setup costs are exactly why short stays favour renting. Stretch the horizon to 10+ years with modest appreciation, and buying pulls ahead.

Practical tips and limits

The 5-year rule: buying rarely pays if you will move within 5 years, because transaction costs (agent fees, registration, mortgage setup) are sunk on day one. Budget maintenance at 1–2% of the home's value per year — the cost renters never see. And note the calculator's limits: it cannot predict interest-rate moves or local price swings, so treat the break-even year as an estimate and re-run the numbers if your plans change.