Rent vs Buy Calculator
Buying is not cheaper or dearer than renting — it is cheaper after a certain number of years. Enter a home you would buy and a place you would rent, and this finds the year the two cross.
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🏠 The home you would buy
Percent of the price, paid once
🧾 Cost of owning
Percent of the home value
1% of value is the usual rule
Charged below 20% equity
Agent fees when you sell
🔑 The place you would rent
📈 Market assumptions
What the home gains each year
What unspent cash would earn
Applied to insurance and HOA dues
How long you would stay
⚖️ Where you stand
📊 Net worth year by year
📋 Year by year
| Year | Owning / month | Renting / month | Home value | Equity after selling | Renter's portfolio | Buying ahead by |
|---|---|---|---|---|---|---|
| 1 | $2,916 | $2,415 | $412,000 | $70,857 | $103,853 | ▼ −$32,996 |
| 2 | $2,942 | $2,487 | $424,360 | $86,291 | $115,865 | ▼ −$29,574 |
| 3 | $2,969 | $2,562 | $437,091 | $102,330 | $128,030 | ▼ −$25,700 |
| 4 | $2,996 | $2,639 | $450,204 | $119,001 | $140,338 | ▼ −$21,337 |
| 5 | $3,025 | $2,718 | $463,710 | $136,332 | $152,780 | ▼ −$16,448 |
| 6 | $3,054 | $2,799 | $477,621 | $154,354 | $165,346 | ▼ −$10,991 |
| 7 | $3,084 | $2,883 | $491,950 | $173,101 | $178,022 | ▼ −$4,922 |
| 8 | $3,115 | $2,970 | $506,708 | $192,604 | $190,797 | ▲ +$1,807 |
| 9 | $3,147 | $3,059 | $521,909 | $212,901 | $203,656 | ▲ +$9,245 |
| 10 | $3,180 | $3,150 | $537,567 | $234,029 | $216,581 | ▲ +$17,448 |
Free to use. Results are estimates for general information, not professional advice — see our full disclaimer.
The question is never “rent or buy” in the abstract. It is whether this home at this price beats that rent over the years you would actually stay. That has an arithmetic answer, and it is usually a year number.
How to use the rent vs buy calculator
- Describe the purchase — price, down payment, mortgage rate and term, and the closing costs you would pay.
- Add the cost of owning — property tax, insurance, maintenance, HOA dues, PMI, plus the appreciation you expect and the fees you would pay to sell.
- Describe the rental — the monthly rent, how fast it rises, and renter’s insurance.
- Set the market assumptions — what invested cash would earn, general inflation, and how many years to compare.
The banner gives you the break-even year, the chart shows both paths, and the table breaks down every year.
How the comparison works
Two people start with the same cash. One buys: the cash goes into the down payment and closing costs, and every month brings a mortgage payment, property tax, insurance, maintenance, HOA dues and — under 20% equity — PMI. The other rents: the cash stays invested, and every month brings rent and renter’s insurance.
Whoever pays less in a given month invests the difference at the same return. That is what keeps the comparison fair — both people spend exactly the same amount each month, and only the split between spending and saving differs.
| Net worth is… | |
|---|---|
| Buying | Home value − selling costs − loan balance, plus anything invested |
| Renting | The investment portfolio |
The break-even year is the first year the buyer’s line crosses the renter’s. Before it, the sunk closing and selling costs are still winning; after it, equity and appreciation pull away.
What moves the answer
Rent, most of all. Rent is the whole cost of renting, while a mortgage payment is only part of the cost of owning. Raise the rent by a few hundred a month and the break-even year moves in by years.
The price-to-rent ratio. Divide the price by the yearly rent. Under about 15 buying tends to win quickly; over about 21 renting can win for a very long time. It is the fastest sanity check there is.
Appreciation and investment return together. These two are a tug of war. Appreciation works on the whole house, including the part you borrowed, which is why a modest rate still moves the needle. Investment return works only on the cash the renter actually has. Try 1% and 6% appreciation and watch the break-even year swing.
How long you will stay. Everything above is irrelevant if you move in three years. Transaction costs alone usually take several years to earn back.
Common mistakes
- Comparing rent with the mortgage payment. Tax, insurance, maintenance and HOA dues often add half again on top of principal and interest.
- Forgetting the exit. Agent fees of 5% to 6% are a real cost of buying; they just arrive at the end.
- Assuming rent stays still. A 3% yearly increase doubles rent in 24 years, and that compounding is much of what makes buying win eventually.
- Treating the break-even year as a deadline. It is a rough marker built on guesses about the future, not a date to plan around.
Terms used here
- Equity — what selling would leave you after agent fees and paying off the loan.
- Closing costs — one-off fees to buy: origination, appraisal, title, taxes and legal work.
- PMI — mortgage insurance charged while you owe more than 80% of the original price. It protects the lender, not you.
- Price-to-rent ratio — the price divided by a year of rent. A quick read on which way a market leans.
Frequently asked questions
What does the break-even year actually mean?
It is the first year your net worth as an owner overtakes your net worth as a renter. Both start with the same cash. The owner spends it on the down payment and closing costs and builds equity; the renter keeps it invested and adds whatever they save each month. Sell before the break-even year and renting would have left you better off; stay past it and buying wins by a growing margin.
Why does buying start so far behind?
Two sets of fees are sunk the moment you transact: closing costs when you buy, and agent fees when you sell. Together they are often 8% to 10% of the price. On top of that, the first years of a mortgage are almost all interest, so very little of each payment turns into equity. It takes time for appreciation and principal to dig out of that hole.
Is the money I do not spend on a down payment really invested?
In the model, yes — and that is the point. Comparing a mortgage payment with rent alone flatters buying, because it ignores what the down payment could have earned elsewhere. Here the renter starts with that cash invested and adds the monthly difference, so both paths spend the same amount and only the destination differs. If you would spend the difference rather than invest it, set the investment return to zero and buying looks much better.
What investment return and appreciation should I use?
Use numbers you would defend, not the best years you remember. Long-run home appreciation in most markets has been close to inflation plus a little, and a diversified stock portfolio has returned more than that over long periods while dropping sharply along the way. The honest move is to try a few combinations - the break-even year moves more with these two inputs than with anything else on the page.
Does this include the mortgage interest tax deduction?
No, and that is deliberate. Deductions depend on your country, your bracket, whether you itemise, and caps that change with the law. Including a guess would make the result look more precise than it is. If a deduction applies to you, treat the break-even year here as slightly pessimistic for buying.
Why is maintenance a percentage of the home value?
Because upkeep scales with the house, not with the loan. One percent of the value per year is the common planning figure - roof, heating, appliances, paint and the repair you did not see coming, averaged out. Some years are nothing and one year is a new roof. Lower it if the home is new or you do the work yourself.
What does this leave out?
Everything that is not a number: whether you will still want this home in seven years, how a landlord handles a broken boiler, the cost and disruption of moving, rent control, HOA special assessments, and the peace of mind of a fixed payment. Those often decide the question. The calculator is for the part that arithmetic can settle.
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