Rent vs. Buy Calculator

1. Enter the home purchase price and your current monthly rent.
2. Set your down payment percentage, mortgage interest rate, and loan term.
3. Specify how many years you plan to stay in the home.
4. Optionally adjust advanced settings like property tax rate, HOA fees, maintenance, home appreciation, investment return rate, and your marginal tax rate.
5. Review the verdict to see whether buying or renting saves you more money over your time horizon.
6. Expand the year-by-year breakdown to see how costs compare over time and identify the break-even point.

The True Cost of Buying a Home

The sticker price of a home is only the beginning. When you buy, you also pay closing costs (typically 2% to 5% of the purchase price), property taxes, homeowner's insurance, and ongoing maintenance. If you have an HOA, those monthly fees add up as well. Your mortgage payment itself is split between interest and principal, and in the first several years, the majority of each payment goes toward interest rather than building equity. When you eventually sell, you will pay another 5% to 6% in real estate agent commissions and transaction fees. This calculator takes all of these factors into account to give you a realistic picture of what homeownership actually costs.

The True Cost of Renting

Renting is often dismissed as "throwing money away," but that perspective ignores several important advantages. Renters avoid maintenance costs, property taxes, and the risk of home value declines. They also keep their capital liquid: instead of locking $70,000 or more into a down payment, a renter can invest that money in a diversified portfolio. At a 7% average annual return, that invested capital grows significantly over time. The main downside of renting is that rent tends to increase each year (typically 3% to 5%), and you never build equity in the property. This calculator models rent increases and investment growth so you can see the full picture.

The Break-Even Point

The break-even point is the number of years after which buying becomes financially better than renting. In most markets, this falls somewhere between 5 and 10 years. If you plan to move before reaching the break-even point, renting is usually the better financial choice. The break-even year is sensitive to several variables: higher home prices and interest rates push it further out, while strong home appreciation and low rent-to-price ratios pull it closer. Use the year-by-year breakdown table to see exactly when (or if) buying overtakes renting for your specific situation.

Opportunity Cost: The Factor Most People Forget

One of the most overlooked aspects of the rent vs. buy decision is opportunity cost. When you put $70,000 toward a down payment and $10,000 toward closing costs, that $80,000 is no longer available to invest elsewhere. If you had invested it in an index fund averaging 7% annual returns, it would grow to roughly $157,000 over 10 years. This calculator accounts for this by tracking what a renter could earn by investing the down payment and any monthly savings (the difference between the cost of owning and the cost of renting). This makes the comparison much more accurate than simply comparing a mortgage payment to a rent payment.

Estimate your monthly mortgage payment with our Mortgage Calculator, see how your investments grow over time with the Compound Interest Calculator, or plan your savings goals with the Savings Calculator.