Rent vs Buy Calculator: Formula, Example and What the Result Means
Compares the first-year cost of renting with buying a home. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Rent vs Buy Calculator.
Why it matters
Buying property in Australia involves a deposit, stamp duty, lender requirements such as the APRA serviceability buffer, and ongoing repayments that move with interest rates. Investors also weigh rental yield, negative gearing and capital gains tax.
What you need to enter
The calculator asks for 7 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Weekly rent ($) | 600 |
| Property price ($) | 800000 |
| Deposit ($) | 160000 |
| Interest rate (%) | 6.2 |
| Annual ownership costs ($) | 8000 |
| Return on deposit if invested (%) | 5 |
| Property growth (% per year) | 4 |
The formula
Owning cost = interest + rates, insurance and maintenance + lost return on the deposit − expected capital growth.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Cheaper in year one | Buying |
| Annual cost of renting | $31,200.00 |
| Annual net cost of owning | $23,680.00 |
The headline figure is Buying (cheaper in year one). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
A practical tip
Buying costs like stamp duty are a one-off hit, so buying tends to look better the longer you plan to stay.
Keep going
Before relying on the number, read Rent vs Buy: What to Check Before You Trust the Number. You might also find these guides useful:
- Using a Rent Affordability Calculator in Australia: A Step-by-Step Guide
- Interest-Only vs Principal and Interest Calculator Explained for Australians
- How the Split Home Loan Calculator Works (With a Worked Example)
Frequently asked questions
- Do these calculators match what my bank will say?
- Lenders use their own models, expense benchmarks and policies. Use these results to prepare, then speak to a lender or broker.
- Are stamp duty rates current?
- Duty thresholds are indexed or changed regularly. Always confirm with your state revenue office before relying on a figure.
- Is this financial advice?
- No. The calculators give general estimates only and don’t consider your objectives or financial situation.
Run your own numbers in the Rent vs Buy Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.