Rent vs Buy Calculator
Should you rent or buy a home? Compare total costs, equity building, and break-even point to make the best financial decision for your situation.
Buying Costs
Renting Costs
Investment & Timeline
How to Use This Rent vs Buy Calculator
- Enter the home purchase price, down payment %, mortgage rate, and term.
- Set property tax rate, home insurance, and maintenance cost as percentage of home value.
- Enter home appreciation rate and selling closing costs.
- Enter the monthly rent, annual rent increase, and renters insurance.
- Set the investment return rate for money that would have been used as a down payment.
- Choose the time horizon in years to compare.
- Click Compare to see the total costs, equity, break-even point, and recommendation.
Formula
Renting Total Cost = Total Rent Payments + Renters Insurance − Investment Growth (Down Payment × (1 + Return)n − Down Payment)
Break-Even = Year where Buying Net Cost < Renting Total Cost
The calculator amortizes the mortgage year-by-year, tracking the remaining loan balance (equity), while compounding investment returns on the down payment and closing costs that a renter would invest instead. Home value grows at the appreciation rate each year.
Examples
$350K home, 20% down ($70K), 6.5% rate, 30yr. $1,800/mo rent, 3% rent increase, 7% investment return.
Buying net cost: ~$89,000. Renting total: ~$95,000. Buying wins by ~$6,000. Break-even at ~6.5 years.
Same inputs but only 3 years. Renting wins because closing costs on both buy and sell sides ($28K combined) outweigh the equity and appreciation gains in a short window.
$400K home at 5% appreciation, 3% rent increase. Over 10 years, home gains ~$204K in value. Buying wins by $45K+ as appreciation outpaces the investment portfolio growth.
Frequently Asked Questions
What is the break-even point?
The break-even point is the number of years it takes for the total net cost of buying to become less than the total cost of renting. Before this point, renting is cheaper; after it, buying saves you money. It typically falls between 3–7 years depending on your local market.
What hidden costs of buying a home should I consider?
Beyond the mortgage, buyers should budget for property taxes (1–3% of home value/year), homeowner's insurance, maintenance and repairs (1–2% of home value/year), HOA fees if applicable, PMI if putting less than 20% down, and selling closing costs (5–6% of sale price).
When does renting make more sense?
Renting is often better when you plan to move within 3–5 years, live in a very expensive housing market where price-to-rent ratios are high (30+), if you prefer flexibility and lower maintenance, or when interest rates are very high relative to investment returns.
Should I factor in investment returns on my down payment?
Yes. If you rent instead of buy, you can invest your down payment and closing costs. The opportunity cost of that money is a real financial factor. This calculator assumes your invested funds grow at the specified annual return rate, compounding over time.
Does this account for tax benefits of buying?
No, this calculator does not model tax deductions for mortgage interest or property taxes, as the benefit varies greatly by individual tax situation and many taxpayers take the standard deduction. Consult a tax advisor for your specific scenario.