Finance & Business Hub

Rent vs Buy
Calculator

Compare the true long-term cost of renting versus buying — including opportunity cost on your down payment, home appreciation, equity built, tax deductions, and maintenance. Find your break-even year.

🏢 Renting

Monthly Rent

Annual Rent Increase

Renter's Insurance / mo

Investment Return on Savings

🏠 Buying

Home Price

Down Payment

Mortgage Rate

Loan Term

Home Appreciation

Property Tax Rate

Maintenance / year

Home Insurance / mo

HOA Fees / mo

Closing Costs

Selling Costs

Cost Comparison

🏢 Total Cost of Renting

Net Cost

after investment growth on savings

Rent paid—

Renter's insurance—

Investment growth on savings—

Net cost of renting—

🏠 Total Cost of Buying

Net Cost

after equity and appreciation

Mortgage payments—

Property tax + insurance—

Maintenance + HOA—

Closing + selling costs—

Home equity gained—

Appreciation gain—

Net cost of buying—

Cumulative net cost over time

Renting

Buying

What "net cost" means here

Raw costs (rent paid, mortgage payments) don't tell the full story. Net cost adjusts for what you get back: equity you build, home value appreciation, and — critically for renters — the investment growth on money you didn't tie up in a down payment. A renter who invests their would-be down payment at 7% return builds real wealth too. This calculator accounts for all of it.

The break-even year explained

Buying is expensive upfront — closing costs, down payment, early mortgage interest. Renting is cheaper short-term. The break-even year is when cumulative net cost of buying drops below cumulative net cost of renting. If you plan to stay longer than the break-even year, buying typically wins. If you might move before then, renting is likely better financially.

Opportunity cost: the hidden factor

A 20% down payment on a $450,000 home is $90,000. If that $90,000 were invested in a diversified index fund at 7% annually, it grows to ~$343,000 in 20 years. This is the opportunity cost of the down payment — one of the most underappreciated numbers in the rent vs buy debate. This calculator includes it on the renting side.

When buying almost always wins

Buying tends to win decisively when: (1) you stay 7+ years in an appreciating market, (2) your mortgage payment is close to or below local rents, (3) you're in a high tax bracket and itemize deductions, and (4) you have a stable income and emergency fund. It tends to lose when you move frequently, buy in a flat or declining market, or stretch too far on the purchase price.

🏠 Decided to buy? Model overpayments to cut years off your mortgage.

Try the Overpayment Calculator →

Frequently Asked Questions

Is it always better to buy than rent? ▾

No — it depends entirely on your time horizon, local market conditions, and what you'd do with the down payment money otherwise. In expensive cities with high price-to-rent ratios (like NYC or San Francisco), renting and investing the difference often beats buying for stays under 10 years. In lower cost-of-living cities with strong appreciation, buying wins faster. The break-even year is the key number to look at for your specific situation.

What home appreciation rate should I use? ▾

US home prices have appreciated at roughly 3–4% annually over the long run (close to inflation). From 2012–2022, many markets saw 6–8% annual appreciation, which is unusual and unlikely to persist. For a conservative estimate use 2–3%, for a moderate estimate use 3.5–4%, and avoid assuming anything above 5% for long-term planning. The calculator defaults to 3.5%, which is slightly above the historical average.

Does the mortgage interest tax deduction change the math? ▾

Less than most people think, for two reasons. First, the 2017 Tax Cuts and Jobs Act roughly doubled the standard deduction, so most homeowners no longer itemize. Second, early mortgage payments are mostly interest (deductible), but after 10+ years they're mostly principal (not deductible). For a $360,000 loan at 7%, year 1 interest is ~$25,000 — which only benefits you if it plus other deductions exceeds the $15,000 standard deduction (2025, single filer). Many buyers don't clear that bar, especially in later years.

What is a good price-to-rent ratio? ▾

The price-to-rent ratio is home price divided by annual rent. Below 15 generally favors buying, 15–20 is a gray zone, and above 20 starts to favor renting. For example, a $450,000 home with $2,200/month rent has a ratio of 450,000 / 26,400 = 17 — borderline. You can calculate this for your specific market to quickly gauge which direction the math leans before running a full analysis.

How to Use the Rent vs Buy Calculator

Compare the true long-term cost of renting and buying to find your break-even point.

Enter the home purchase details

Home price, down payment, mortgage rate, and loan term. Include property tax rate and estimated maintenance costs (typically 1–2% of home value annually).

Enter current rental details

Monthly rent and expected annual rent increase (typically 2–4%).

Set your assumptions

Expected home price appreciation (historically 3–4% annually) and investment return rate (what you'd earn investing the down payment instead — typically 7% for stock index funds).

Find your break-even point

This is the key output — the number of years after which buying becomes cheaper than renting. It's usually 5–9 years but varies significantly by market.

Make a decision

If you're confident you'll stay for longer than the break-even point, buying makes financial sense. If you might move sooner, renting is often better despite the 'money down the drain' perception.

💡

💡 The biggest financial mistake homebuyers make: ignoring transaction costs. Buying and selling a home costs 8–12% of the home's value in estate agent fees, closing costs, and moving costs. These extend your break-even point significantly.

Rent vs BuyCalculator

What "net cost" means here

The break-even year explained

Opportunity cost: the hidden factor

When buying almost always wins

Rent vs Buy
Calculator