Rent vs. Buy Calculator

Compare the long-run cost of renting against buying — including equity, appreciation, and the opportunity cost of your down payment — and find your break-even year.

How the rent vs. buy calculator works

The honest way to compare renting and buying isn’t the monthly payment — it’s net worth over time. This calculator runs two people side by side with the same starting cash. The buyer puts it down on a home; the renter invests it. Each year, whichever housing option costs less, that person invests the difference, and both investment pots grow at the return you set.

On the buying side, your net worth is home equity (the home’s appreciated value minus the remaining mortgage balance) plus any side investments. The model uses the real amortization schedule for the loan balance, applies your appreciation rate to the home value, and subtracts property tax and the insurance-plus-maintenance you’d carry as an owner.

On the renting side, net worth is simply the investment account: the down payment that was never spent, compounded, plus the years when rent was cheaper than owning. The break-even year is the first year the buyer’s net worth overtakes the renter’s. Buy and stay past it and owning wins; move before it and renting and investing comes out ahead.

A few simplifications matter. The model leaves out the costs of buying and selling (realtor commissions of around 5–6% push break-even later) and the mortgage-interest tax deduction (which helps buying). Treat the break-even year as a well-reasoned estimate, not a guarantee.

How to use this calculator

Enter the home price, your down payment, and the mortgage rate and term.
Add ongoing ownership costs: property tax rate and combined insurance + maintenance.
Set your expected home appreciation and the monthly rent (with its growth rate) for a comparable place.
Set the investment return the renter earns and how many years you’d stay.
Press Calculate to see who comes out ahead, the break-even year, and the net-worth chart.

Key terms

Break-even year: The year a buyer’s net worth catches up to a renter’s. Staying past it favors buying; leaving before it favors renting.
Opportunity cost: The return the down payment (and any monthly savings) could have earned if invested instead of tied up in a home. It’s why renting can win even as home values rise.
Home equity: The home’s current value minus the remaining mortgage balance — the part of the property you actually own.

Tips

The single biggest driver is how long you stay: short stays almost always favor renting because buying and selling costs get spread over fewer years.
Don’t forget maintenance — owners typically spend 1% or more of the home’s value a year, which the monthly mortgage payment hides.
Run a pessimistic scenario too: a low appreciation rate and a higher investment return is the case where renting most often wins.

Frequently asked questions

Is it cheaper to rent or buy?

It depends on how long you stay, local prices and rents, and what your down payment could earn if invested. Buying tends to win the longer you stay because you build equity and stop paying transaction costs; renting often wins for short stays or when investment returns outpace home appreciation. This calculator finds the break-even year for your specific numbers.

What is the break-even year in rent vs. buy?

It’s the year a buyer’s net worth (home equity plus side investments) overtakes a renter’s (the invested down payment plus savings). Before it, renting and investing leaves you wealthier; after it, owning does. Many markets land somewhere between 4 and 8 years, but it varies widely.

Why does this compare net worth instead of monthly payments?

Monthly payments ignore the two biggest financial effects: the equity a buyer builds and the investment growth a renter earns on the down payment they didn’t spend. Comparing net worth captures both, which is why a higher monthly payment to buy can still leave you wealthier — or poorer — than renting.

Does the calculator include closing and selling costs?

No. To keep the inputs manageable it excludes the cost of buying (roughly 2–5%) and selling (around 5–6% in realtor commissions). Both fall on the buyer, so including them would push the break-even year later. Mentally add a year or two if you expect to sell.

What about the mortgage-interest tax deduction?

It’s not modeled, because most households now take the standard deduction and get no extra benefit from mortgage interest. If you itemize and the deduction helps you, buying does a little better than the calculator shows.

What home appreciation rate should I use?

Long-run U.S. home prices have risen roughly 3–4% a year on average, close to inflation, though individual markets swing far more. Use a conservative figure — appreciation is the input people most often overestimate, and small changes move the break-even year noticeably.

How does my down payment affect the comparison?

A larger down payment lowers the loan and monthly payment but also represents more cash that could have been invested. The calculator credits the renter with investing that exact amount, so a big down payment doesn’t automatically favor buying — it shifts money from potential investment returns into home equity.

Planning further? Try the mortgage calculator or the mortgage refinance calculator.

Mortgage Calculator

Estimate your monthly mortgage payment, total interest cost, and full amortization schedule.

Mortgage Refinance Calculator

See your new payment, monthly savings, break-even point, and lifetime interest difference before you refinance your mortgage.