Rent vs Buy Calculator
Compare the true long-term cost of renting versus buying. Includes home appreciation, rent increases, taxes, maintenance, equity growth, and the year you break even.
per year
How it works
- 1Enter the buy scenario
Home price, down payment, mortgage rate and term, plus tax/insurance/maintenance assumptions.
- 2Enter the rent scenario
Current rent for an equivalent home and an estimated annual rent increase.
- 3Pick your horizon
How long you plan to stay. Most break-even points fall between year 5 and year 8.
The 'rent vs buy' question is the single most consequential housing decision most people make. Buying is often pitched as 'always better than throwing away rent,' but the math is more nuanced — and time horizon is the deciding factor.
Buying involves big up-front costs: 3–6% closing costs, often 20% down, plus moving and setup. The first 5 years of mortgage payments are mostly interest. Selling triggers another 6% in realtor and closing fees. If you move within 3 years of buying, you almost always lose money compared to renting.
Renting carries opportunity cost too. Rent typically rises 2–4% per year, money paid never builds equity, and over decades the cumulative rent paid can exceed a mortgage payoff. But renting offers flexibility, no maintenance, no property tax surprises, and freed-up capital that can be invested.
The break-even point is the year cumulative ownership cost (after subtracting equity) drops below cumulative rent. With moderate appreciation (3%) and rent inflation (3%), break-even typically lands between year 5 and year 8. Stay longer and buying pulls ahead. Move sooner and renting wins.
Three things to test in the calculator: a flat housing market (1–2% appreciation), a hot market (5–6%), and a stable rent market (1.5%) vs a hot one (5%). Your conclusion can flip dramatically based on these. Use realistic local numbers, not nationwide averages.
Example scenarios
Typical break-even ~year 6–7. Buying advantage usually $80k–$200k by year 15.
Buying breaks even faster — often year 4–5 — and pulls far ahead by year 10.
Break-even pushes to year 9–11. Renting + investing the down payment can win.
Common questions
When does buying beat renting?
Most analyses show buying becomes financially better than renting after about 5–7 years, assuming average appreciation. Below that, transaction costs (closing costs, realtor fees) usually wipe out the equity gain.
What's the 5% rule?
Multiply the home price by 5% and divide by 12. If you can rent an equivalent home for less than that monthly figure, renting may be cheaper. The 5% covers property tax, maintenance, and the opportunity cost of the down payment.
What costs does the calculator include for buying?
Mortgage payment, property tax, homeowner's insurance, ongoing maintenance (typically 1% of home value/year), and one-time closing costs. The opposing rent column includes rent + renter's insurance with annual rent increases.
Should I count my home as an investment?
A home generates value through avoided rent and appreciation, but maintenance, taxes, and time eat into returns. Historically, broad stock indexes have produced higher real returns. Buy a home for stability and lifestyle — investments deliver the wealth growth.
What's break-even?
The year your cumulative buying cost (after subtracting equity) equals or falls below cumulative renting cost. Before break-even, renting is cheaper net of equity. After break-even, owning pulls ahead and the gap usually widens.