Rent vs Buy Calculator
Is it cheaper to rent or buy? Compare the true cost over time, including equity, taxes, and opportunity cost.
Buying
Renting & horizon
Investment return = what you'd earn investing the down payment if you rented instead.
Break-even point
Buying does not break even within 7 years under these assumptions. Renting and investing the difference comes out ahead for this horizon.
Net cost over time (lower is better)
Settle the rent-or-buy debate with real numbers
The honest answer is "it depends" — on how long you stay, your market, and what you'd do with the money instead. This calculator does the full math.
True cost comparison
Compares the full net cost of buying (after equity) against renting (after investing the down payment) over your time horizon — not just the monthly payment.
Break-even year
Pinpoints the year buying becomes cheaper than renting, so you know whether your planned stay is long enough to justify a purchase.
Equity & appreciation
Accounts for the equity you build through principal payments and home appreciation — the wealth-building case for buying.
Opportunity cost
Credits renters with the investment growth they'd earn on the down payment, giving renting a fair shake instead of a rigged comparison.
All the hidden costs
Includes property tax, insurance, maintenance, closing costs, and ~6% selling costs — the expenses that catch short-term buyers out.
100% private
Every figure stays in your browser. No account, no tracking, no data leaves your device.
When to use it
On the fence
You can afford to buy but aren't sure it beats renting — see the break-even for your situation.
Likely to move
If you might relocate in a few years, check whether buying has time to pay off.
Expensive markets
In high-price cities, renting and investing can win — test it with your local rent and prices.
Job relocation
Weigh buying versus renting in a new city before committing to a purchase.
Frequently Asked Questions
Is it cheaper to rent or buy?
It depends almost entirely on how long you stay and your local market. Buying carries large upfront costs (down payment and ~3% closing costs) and exit costs (~6% to sell), so it usually only beats renting after several years of building equity and appreciation. The shorter your time horizon, the more renting tends to win. This calculator finds the break-even year for your specific numbers.
What is the break-even point?
The break-even year is when the cumulative net cost of buying drops below the cumulative net cost of renting. Before that point, the high transaction costs of buying make renting cheaper; after it, equity and appreciation tip the balance toward buying. As a rough rule of thumb, break-even often lands around 5–7 years, but it varies widely with rates, rent, and appreciation.
Why does the calculator include an investment return?
If you rent instead of buy, you keep the down payment and closing costs in your pocket — money you could invest. Ignoring that opportunity cost unfairly favors buying. The calculator assumes a renter invests that lump sum and earns your chosen return, then compares the renter's net position (rent paid minus investment growth) against the buyer's (costs minus home equity).
What costs of buying are easy to forget?
Beyond the mortgage, owning includes property tax, homeowners insurance, maintenance (typically ~1% of home value per year), HOA fees in some areas, and the ~6% in realtor and closing costs when you sell. These "hidden" costs are exactly why buying for a short period rarely pays off, and the calculator includes them in the buy-side total.
Does buying always build wealth?
Not automatically. Home equity grows through principal payments and appreciation, but transaction costs, maintenance, and the opportunity cost of the down payment all work against it. In high-price, low-appreciation markets, a disciplined renter who invests the difference can come out ahead. Buying builds wealth most reliably over long holding periods in markets with steady appreciation.
What assumptions should I be careful with?
Home appreciation and investment return are the two most powerful — and most uncertain — inputs. Small changes swing the result significantly. Use conservative, realistic figures (long-run US home appreciation has averaged roughly 3–4% nominal; diversified investments perhaps 6–7%) rather than optimistic ones, and try a few scenarios to see how sensitive your break-even is.
Understanding Rent vs Buy
"Renting is throwing money away" is one of the most repeated — and most misleading — pieces of financial advice. Buying has its own large costs that build no equity: mortgage interest, property tax, insurance, maintenance, and transaction fees. The real question is not whether to build equity, but whether, over your specific time horizon, the total cost of owning beats the total cost of renting and investing the difference.
Why time horizon is everything
Buying front-loads big costs — a down payment plus roughly 3% in closing costs — and ends with another roughly 6% to sell. Those transaction costs have to be earned back through equity and appreciation before buying pulls ahead. Stay only two or three years and you may never recover them; stay ten and equity plus appreciation usually win comfortably. This is why the break-even year is the single most important output of any rent-vs-buy analysis.
The opportunity cost renters forget
The fairest comparison credits the renter with what they could do with the money they did not tie up in a house. A $80,000 down payment plus closing costs, invested at 6–7%, grows substantially over a decade. Ignore this and buying always looks better than it is. A disciplined renter who actually invests the difference — rather than spending it — is the renter who can come out ahead, particularly in expensive markets where price-to-rent ratios are high.
The price-to-rent ratio shortcut
A quick gauge before running full numbers is the price-to-rent ratio: home price divided by annual rent for a comparable place. Ratios under about 15 generally favor buying; over about 21 generally favor renting; in between, it depends on your assumptions. A $400,000 home versus $2,000/month rent ($24,000/year) gives a ratio of 16.7 — borderline, exactly the kind of case where a detailed calculation earns its keep.
The non-financial factors
Money is only half the decision. Buying offers stability, freedom to renovate, and protection from rent hikes, but ties you to one location and one large illiquid asset. Renting offers mobility, predictable costs, and no maintenance responsibility, at the cost of building no equity and facing rent increases. Many people rationally choose the "more expensive" option because it fits their life — the calculator informs the decision rather than making it for you.
Using the result wisely
Because appreciation and investment returns are uncertain, treat the output as a scenario, not a prophecy. Run a conservative case and an optimistic one. If buying wins comfortably in both, the decision is easy; if the result flips between scenarios, your choice is genuinely close and non-financial factors should carry more weight. The goal is a confident, informed decision — not false precision about an unknowable future.