Rent vs Buy Calculator
Find out whether renting or buying a house is cheaper for you over the long run. Compare total cost with mortgage, taxes, maintenance, and the opportunity cost of investing your down payment.
How the Rent vs Buy Comparison Works
Deciding whether to rent or buy a house comes down to a simple question with a complicated answer: which path leaves you with more money after N years? This calculator answers that by modeling two parallel paths — one where you buy and eventually sell, and one where you rent and invest the down payment you would have spent. The break-even point tells you how long you'd need to stay for buying to come out ahead.
The true cost of buying is much more than the monthly mortgage payment. We add up principal and interest (using the same amortization math as our mortgage calculator), then layer on property taxes, homeowner's insurance, ongoing maintenance (typically 1% of home value per year), HOA dues if any, and PMI if your down payment is under 20%. We also subtract the net proceeds from selling at the end of your holding period — that is, the appreciated home value minus the remaining loan balance and selling costs (usually 6%).
The trick to a fair renting vs buying comparison is the opportunity cost. If you rent instead of buy, your down payment and closing costs don't disappear — they can be invested. So on the renting side we track an investment account that starts with what you would have paid in down payment and closing, grows at your chosen investment return rate (the long-term S&P 500 real return is around 7%, but 6% is a conservative default), and grows further each month by the amount you save when your buying expenses exceed your rent.
The break-even year is the first year buying becomes cheaper than renting plus investing. With a $400,000 home, $2,500 monthly rent, 3% annual rent growth, and 3% home appreciation, break-even typically lands somewhere between 5 and 8 years — but it shifts dramatically with even small changes to mortgage rate, rent growth, or investment return. If you plan to move within 3 years, almost any scenario favors renting; if you plan to stay 10+ years in a stable market, buying usually wins.
This tool is intentionally simple. It does not model mortgage interest deduction (which mainly benefits high-income filers who itemize), capital gains tax on home sale (most primary residences qualify for the $250K/$500K exclusion anyway), or inflation. It also assumes you stay invested through the full period. Use it as a starting point for the decision, not as financial advice, and talk to a fee-only financial planner before signing anything.