Rent vs Buy Calculator
Should you rent or buy? Compare the true cost of each over time and find your break-even year.
If You Buy
If You Rent
The whole rent-vs-buy decision turns on this number
Assumptions
How fast the home gains value
Annual, as a % of home value — varies a lot by state
~1% of home value is a common estimate
Agent commission + closing, paid when you sell
What the down payment could earn if invested instead
Buying Beats Renting After
Never
Renting stays cheaper over your whole horizon
Over 10 years, renting costs you $9,818 less than buying. Buying's upfront costs haven't been recouped within your horizon.
📊Renting's cost already credits the $88,978 a renter could earn by investing the down payment and closing costs at 7% instead of sinking them into a home — the buyer's opportunity cost.
💡The buy figure is a NET cost — it assumes you sell at the end of the horizon and recover your equity plus appreciation, minus selling costs. Renting can still be the right call for flexibility even when buying is cheaper on paper.
Net Cost — Buying
$223,486
Over 10 years, after sale
Net Cost — Renting
$213,668
Over 10 years, after investing
Renter's Investment Gain
$88,978
Down payment invested at 7%
Cost Over Time
Cumulative net cost of each path. Where the buying line drops below the renting line is your break-even point.
How to use this calculator
- Enter the buy scenario — home price, down payment and mortgage rate.
- Enter the rent scenario — your monthly rent and how fast it rises each year.
- Set how long you’ll stay — this is the single most important input; the whole decision turns on it.
- Adjust the assumptions — home appreciation, property tax rate, annual maintenance, selling costs, and the investment return a renter would earn on the down payment.
The calculator shows the break-even year, the net cost of each path, and a chart of cumulative cost over time with the break-even marked.
How it works
The two paths are compared as cumulative net cost, year by year:
- Buying — down payment and closing costs upfront, then mortgage payments, property tax, insurance and maintenance every year. The cost is shown as a net figure: at the end of the horizon the home is assumed sold, and you recover your equity plus appreciation, minus selling costs.
- Renting — rent each year, growing by the annual increase you set — but the renter also invests the down payment and closing costs they did not have to spend. The investment gain on that capital is credited against the rent, because it is a real benefit of renting (and the buyer’s opportunity cost).
Because buying front-loads its costs but builds equity over time, its net-cost line starts high and rises slowly, while renting’s line rises steadily. The point where the buying line drops below the renting line is the break-even year — before it, renting is cheaper; after it, buying is.
Property tax, maintenance and selling costs are all editable, because they vary widely by location and home, and each meaningfully shifts the break-even year.
The limits of an estimate
This is a financial comparison, not the whole story. It cannot price the flexibility of renting or the stability of owning, and it assumes steady appreciation, rent growth and investment returns — all of which vary in the real world. Treat the break-even year as a decision aid: if you are confident you’ll stay well past it, buying is likely the cheaper path; if your plans are uncertain, renting carries less risk.
Frequently Asked Questions
Is it cheaper to rent or buy a house? ▾
It depends almost entirely on how long you stay. Buying carries large upfront costs — the down payment and closing costs — so in the early years renting is usually cheaper. Over time, mortgage payments build equity and the home appreciates, while rent only rises. Eventually buying overtakes renting: the year that happens is the break-even point. Stay past it and buying is cheaper; sell before it and renting would have cost you less. This calculator finds that break-even year for your numbers.
What is the break-even point for buying a home? ▾
The break-even point is the year at which the cumulative net cost of buying drops below the cumulative cost of renting. 'Net' cost of buying counts everything you pay in — down payment, closing costs, mortgage, tax, insurance, maintenance — minus the equity and appreciation you would recover if you sold. For typical assumptions the break-even falls somewhere around 3 to 7 years, but a high price-to-rent ratio, slow appreciation, or steep closing costs push it later. If you expect to move before the break-even year, renting is the financially safer choice.
Why is renting sometimes better than buying? ▾
Renting wins when you won't stay long enough to recoup buying's upfront costs, when home prices are high relative to rents, or when you value flexibility. A renter avoids closing costs, maintenance, property tax and the risk of the home losing value, and can move easily for a job or life change. Buying builds wealth through equity and appreciation, but only if you hold the home long enough — the transaction costs of buying and later selling are large and are spread thinner the longer you stay.
Does this calculator account for home appreciation and equity? ▾
Yes. The cost of buying is shown as a NET figure: it assumes that at the end of the horizon you sell the home, recover your equity and any appreciation, and pay selling costs. That is why buying can end up cheaper than renting even though the gross payments are higher — a large part of what you pay into a mortgage comes back to you. You can adjust the home appreciation rate, and the calculator also grows rent each year by the rate you set.
What costs of buying do people forget? ▾
The mortgage payment is only part of the cost of owning. Buyers also pay property tax, homeowner's insurance, ongoing maintenance and repairs (often estimated at about 1% of the home's value per year), and sometimes HOA fees — plus closing costs upfront and selling costs at the end. This calculator includes all of them. Forgetting these is why a mortgage payment that looks similar to rent can still make owning more expensive in the early years.
How long should I plan to stay before buying makes sense? ▾
A common rule of thumb is five years, but the honest answer is: until at least the break-even year this calculator shows. The break-even depends on your local price-to-rent ratio, the mortgage rate, appreciation, property tax and how fast rents rise. How long you stay is the single most important input — run your own numbers, and if the break-even lands at six years while you might move in three, renting is the lower-risk choice even if buying looks cheaper over a longer horizon.
What is the opportunity cost of a down payment? ▾
If you buy, your down payment and closing costs are locked into the house. If you rent instead, that same cash could be invested — in a stock index fund, for example — where it would grow. The return you give up by tying the money to a home is the 'opportunity cost' of the down payment. A fair rent-vs-buy comparison must account for it: this calculator credits renting with the investment growth the freed-up cash would earn, using a return rate you can set. Leaving it out quietly favors buying, because it ignores a real benefit of renting.
Does property tax change the rent vs buy decision? ▾
Significantly. Property tax is an ongoing cost of owning that a renter never pays directly, and rates vary enormously — from well under 1% of a home's value per year in some states to over 2% in others. In a high-tax state, property tax alone can push the break-even year out by several years. This calculator has an editable property tax rate so you can use the figure for your own area rather than a national average — it is one of the inputs that most changes the result.