Rent vs Buy Calculator
Compare the true cost of renting and owning, and find the year buying starts to pay off.
| Year | Home value | Loan balance | Own cost/yr | Rent cost/yr | Buyer net worth | Renter net worth | Difference |
|---|
For educational purposes only, not financial advice. Net worth assumes the cheaper option invests its monthly savings, the renter invests the down payment and closing costs, and the buyer sells at the end and pays selling costs.
Should you keep renting or buy a home? It is one of the biggest money decisions you will make, and the answer is rarely as simple as “rent is throwing money away.” Buying builds equity, but it also brings closing costs, property taxes, insurance, maintenance and selling fees. Renting looks more expensive month to month in some markets, yet it frees your down payment to grow in investments.
Our free rent vs buy calculator puts both paths side by side. Enter your home price, mortgage terms, rent and a few assumptions, and it shows your total cost of each option, your net worth after every year, and your breakeven point: the year when buying starts to beat renting.
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Keep reading to learn how to use the tool, what each input means, how the math works, and when renting or buying usually comes out ahead.
How to Use the Rent vs Buy Calculator
You can get a clear answer in under two minutes:
- Enter the home price you are considering and your planned down payment (as a dollar amount or percentage).
- Add your mortgage details: interest rate and loan term (15 or 30 years). Not sure of your monthly payment? Check it first with our Mortgage Payment Calculator.
- Fill in ownership costs: property tax rate, homeowners insurance, HOA fees and yearly maintenance.
- Enter your current or expected rent, plus renters insurance and how fast rent tends to rise in your area.
- Set your assumptions for home price growth, investment return, closing costs and selling costs.
- Choose how long you plan to stay. This is the single most important input.
- Click Calculate to see the year-by-year comparison, the breakeven year and a chart of net worth for both paths. Export the results to CSV or PDF, or hit Reset to try another scenario.
What Each Input Means
Small changes in these numbers can move your breakeven point by years, so it pays to use realistic figures.
| Input | What it is | Typical starting point |
|---|---|---|
| Home price | Purchase price of the home | Local listing prices |
| Down payment | Cash paid upfront | 3.5% to 20% |
| Mortgage rate | Annual interest rate on the loan | Your lender’s current quote |
| Loan term | Length of the mortgage | 30 or 15 years |
| Property tax | Yearly tax as % of home value | 0.3% to 2.5%, varies by state |
| Homeowners insurance | Yearly premium | Get a quote for your ZIP code |
| HOA fees | Monthly association dues | $0 if none |
| Maintenance | Repairs and upkeep per year | 1% to 2% of home value |
| Closing costs (buy) | Fees paid when you purchase | 2% to 5% of price |
| Selling costs | Agent commission and fees when you sell | 6% to 8% of sale price |
| Home appreciation | Yearly growth in home value | 3% is a common long-run assumption |
| Monthly rent | Rent for a comparable home | Local listings |
| Rent increase | Yearly rent growth | 3% is a common assumption |
| Investment return | What your saved cash earns if invested | 5% to 7% |
| Years in home | How long you plan to stay | Be honest about life changes |
The ranges above are general guidance, not advice. Your lender, insurer and local tax office can give you exact numbers.
How the Calculator Works
The calculator compares the net worth of a buyer and a renter who start with the same cash, month by month. A fair comparison needs three ideas.
1. True cost of owning. Your monthly cost is more than the mortgage payment. It adds property tax, insurance, HOA fees and maintenance. On top come one-time closing costs when you buy and selling costs when you leave.
2. Opportunity cost. The renter does not spend the down payment and closing costs. The calculator assumes that money is invested and grows at your chosen return. Each month, whichever path is cheaper invests the difference, so both sides stay comparable.
3. Home equity. The buyer builds wealth two ways: paying down the loan balance and home price growth. The calculator subtracts what you would still owe and what it costs to sell.
At the end of each year, it compares:
- Buyer net worth = Home value × (1 − selling cost) − Loan balance + Buyer investments
- Renter net worth = Invested down payment and closing costs + Invested monthly savings
Whichever number is larger tells you which choice leaves you wealthier at that point.
What Is the Breakeven Point?
The breakeven point is the number of years you must stay in a home before buying leaves you better off than renting. Before that year, renting wins. After it, buying wins.
Buying usually loses in the early years for a simple reason: upfront costs. Closing costs, selling fees and the high share of interest in early mortgage payments take years to recover. Over time, rising rents, loan paydown and home appreciation tip the balance toward owning.
That is why the most useful question is not “is buying better?” but “will I stay longer than my breakeven point?” If you might move for a job, a growing family or a new city within a few years, renting is often the safer choice.
Example: Renting vs Buying a $400,000 Home
In this example, buying overtakes renting in year 12. Here are the assumptions (illustrative only, not current market rates):
- Home price $400,000 with 20% down ($80,000) and 3% closing costs ($12,000)
- 30-year mortgage at 6.5%: principal and interest of about $2,023 a month
- Property tax 1.1%, insurance $1,800 a year, maintenance 1% a year, selling costs 6%
- Comparable rent $2,200 a month, rising 3% a year, plus $200 a year renters insurance
- Home appreciation 3% a year; investment return 6% a year
In year one, owning costs about $2,890 a month versus about $2,220 for renting. The renter invests the $92,000 upfront cash and the monthly difference.
| Years stayed | Buyer net worth | Renter net worth | Ahead |
|---|---|---|---|
| 1 | $70,857 | $105,883 | Renter by $35,026 |
| 5 | $136,332 | $164,481 | Renter by $28,149 |
| 10 | $234,029 | $244,721 | Renter by $10,692 |
| 12 | $278,939 | $278,984 | Even |
| 15 | $355,254 | $334,283 | Buyer by $20,971 |
If this buyer moves before year 12, renting would have left them wealthier. Change one assumption, such as a lower rate, faster appreciation or higher rent, and the breakeven can shift by several years. That is exactly why running your own numbers matters.
When Renting Wins vs When Buying Wins
| Renting often wins when… | Buying often wins when… |
|---|---|
| You may move within 5 years | You plan to stay 7 to 10+ years |
| Home prices are high compared with rents | Rents are high compared with home prices |
| Mortgage rates are high | Mortgage rates are low or you can buy down the rate |
| Your savings could earn strong returns elsewhere | Local rents are rising quickly |
| You value flexibility and no repair bills | You want stable payments and control over your home |
| Property taxes or HOA fees are steep | Taxes and fees are moderate |
Money is not the only factor. Owning gives stability, freedom to renovate and protection from rent hikes. Renting gives flexibility, predictable costs and less responsibility. Use the calculator for the numbers, then weigh them against your lifestyle.
Quick Rules of Thumb
These shortcuts help you sanity-check a deal before running the full calculator.
The 5% rule
Multiply the home price by 5%, then divide by 12. If you can rent a similar home for less than that number, renting may be the better financial choice. The 5% roughly covers property tax (about 1%), maintenance (about 1%) and the cost of capital (about 3%).
For a $400,000 home: $400,000 × 5% ÷ 12 = about $1,667 a month. Rent below that leans toward renting; rent above it leans toward buying.
The price-to-rent ratio
Divide the home price by one year of rent for a similar home: Price-to-rent ratio = Home price ÷ (Monthly rent × 12).
- Below 15: buying usually looks attractive
- 15 to 20: it depends on your timeline and assumptions
- Above 20: renting usually looks attractive
Rules of thumb ignore your timeline, rate and down payment, so treat them as a first filter. The calculator gives the full picture.
Common Mistakes to Avoid
- Comparing rent only to the mortgage payment. Taxes, insurance, HOA and maintenance can add hundreds of dollars a month.
- Forgetting selling costs. Agent fees and closing costs when you sell often run 6% or more of the sale price.
- Ignoring opportunity cost. Your down payment could be earning returns if you rented instead.
- Assuming home prices always rise fast. Use a conservative appreciation rate and test a lower one.
- Underestimating maintenance. Roofs, HVAC systems and appliances all wear out.
- Overestimating how long you will stay. Job changes and family plans shorten many stays.
- Draining your emergency fund. Keep 3 to 6 months of expenses in reserve after closing.
Frequently Asked Questions
Is it better to rent or buy a house?
It depends on how long you will stay, local prices versus rents, your mortgage rate and what your savings could earn. Buying usually wins if you stay past your breakeven point. A rent vs buy calculator shows which option leaves you wealthier for your exact situation.
How many years do I need to stay for buying to pay off?
Many buyers break even somewhere between 5 and 12 years, but it varies widely by market and interest rate. Enter your own numbers in the calculator to find your breakeven year.
Is renting really throwing money away?
No. Rent buys housing, flexibility and freedom from repair bills. Owners also pay costs they never get back, such as mortgage interest, property tax, insurance and maintenance. The fair comparison is unrecoverable costs on both sides.
What is the 5% rule for renting vs buying?
Multiply the home price by 5% and divide by 12. If comparable rent is below that number, renting is likely cheaper. If rent is above it, buying may make more financial sense.
Does the calculator include opportunity cost?
Yes. It assumes the renter invests the down payment, closing costs and any monthly savings at the return rate you choose, so both paths are compared fairly.
Does the calculator account for taxes?
It includes property taxes. Mortgage interest deductions only help if you itemize, which many households do not, so it is left out by default. Ask a tax professional about your situation.
Can I save or export my results?
Yes. You can export your comparison to CSV or PDF, and use Reset to start a new scenario.
Make a Confident Rent vs Buy Decision
The right choice comes down to your numbers and your timeline. Buying builds equity and stability if you stay long enough. Renting keeps you flexible and lets your savings grow if you might move soon.
Use the rent vs buy calculator above to test different home prices, rates and timelines until you find your breakeven year. Then estimate your exact monthly payment with our Mortgage Payment + Amortization Calculator.
This calculator is for educational purposes only and is not financial advice. Results depend on your assumptions. Talk to a licensed lender or financial advisor before making a decision.