Rent vs Buy Calculator

How it works

Use this rent vs buy calculator to compare renting and buying over time. Both households start with the same cash. The buyer spends the down payment plus buying costs; the renter invests that money instead. Each month, whoever has the lower housing cost invests the difference. At the end, the renter’s portfolio is compared with what the owner would keep after selling: home value minus selling costs and the remaining mortgage, plus any savings the owner invested.

What is the break-even year?

The break-even year is the first year in which the owner’s terminal position after selling costs catches up with the renter’s portfolio. If there is no break-even within your selected horizon, the calculator shows which option leads at the end of it.

A break-even result is most useful when it lines up with your real plans. If the calculator says buying wins in year 9 but you may move in year 4, the ownership path may still be too slow for your situation. If buying still wins after you lower appreciation or the rent you would otherwise pay, the case for ownership is stronger.

Real scenario walkthrough

Suppose a home costs $650,000, the down payment is $130,000, the mortgage rate is 5.25%, and comparable rent is $2,400 per month. Buying starts with a large cash outflow but builds equity through principal payments and appreciation. Owning costs about $4,112 in the first month (mortgage plus property tax, insurance and maintenance), so the renter invests the $139,750 a buyer would spend upfront plus the monthly gap. After 10 years the home is worth about $916,889; after $45,844 of selling costs and the $426,131 mortgage balance, the owner keeps about $444,914, while the renter’s portfolio reaches about $567,856. Renting leads by about $122,943 because the assumed 7% investment return is well above the 3.5% home-price growth. The result is sensitive: with rent of $3,200 instead of $2,400, buying leads by about $32,124, and at 5.5% appreciation buying leads by about $36,815.

Now change only one input at a time. Lower home appreciation, shorten the holding period, or reduce the investment return on renter savings. Watching the break-even year move is often more useful than chasing one supposedly perfect answer.

When renting can be the better financial move

Renting can make sense when you need flexibility, expect to move soon, or live in a market where home prices are high compared with rents. It can also win when the down payment and monthly savings are invested consistently. The renter path is weakest when the money that could have been invested is instead spent without a plan.

When buying can be the better financial move

Buying becomes more attractive when you expect to stay for several years, can handle maintenance costs, and purchase a home that fits your budget without stretching every month. Principal repayment, appreciation, and stability can work together, but the benefit takes time because transaction costs and early mortgage interest are front-loaded.

How to interpret the graph

The graph compares the buyer’s terminal financial position (net sale proceeds plus invested owner savings) with the renter’s investment portfolio. If the buying line crosses above the renting line, that is the estimated point where the owner position has overtaken the renter portfolio. If the renting line stays ahead, flexibility and investment growth are doing more work than homeownership in that scenario. Other household assets and debts are excluded from both paths.

Focus on the distance between the two lines, not just which line is higher. A small difference means lifestyle, school district, commute, and risk tolerance may matter more than the modeled dollar edge. A large difference is a sign to revisit the assumptions and understand what is driving the result.

What it assumes

The mortgage rate is fixed for the modeled term. You can adjust the amortization, transaction-cost rates, property tax, insurance, maintenance, rent growth and other monthly owner fees. The defaults (30-year amortization, 1.5% buying costs, 5% selling costs, property tax 1.1%, insurance 0.26%, maintenance 0.93% of current home value per year, and 2.4% rent growth) are illustrative, not universal. The investment return is a hypothetical user-selected assumption, not a forecast or guarantee; the entered home appreciation is also a scenario assumption, not a prediction. Compare low, base and high assumptions by changing appreciation, rent growth and investment return and rerunning the calculation. Owner and renter each start with the same cash; each month, housing cost plus investment of any cost difference equals the higher of the two housing costs. Investments receive contributions at month start and grow at the entered annual return divided by 12; rent growth is also applied monthly as annual rate divided by 12. All amounts are nominal, not adjusted for inflation, and in the currency you selected. The model leaves out mortgage insurance, renovations, tax deductions, taxes on investment gains or the sale, rent control, moving costs, and lifestyle value. A home is less liquid than an investment account, so the higher terminal position is not always the easier path, and the result is a scenario under these assumptions, not a recommendation.

Inputs that usually change the answer

• Time horizon: Short stays often favour renting because buying and selling costs have less time to spread out.
• Mortgage rate: Higher rates increase the monthly ownership cost and slow principal payoff.
• Home appreciation: A small change in long-term appreciation can have a large effect on homeowner equity.
• Investment return: Renting looks stronger only if the down payment and monthly savings are actually invested.
• Maintenance and taxes: These costs can make ownership more expensive than the mortgage payment suggests.

The comparison math

Formula used: owner terminal position = home value minus entered selling costs and remaining mortgage plus owner’s invested cost savings. Renter terminal position = initial down payment and buying costs invested at the start plus renter’s monthly invested cost savings. Principal repaid is reflected only through the lower remaining mortgage balance; it is not added a second time. The comparison excludes taxes not explicitly modeled and excludes lifestyle value.

How to act on it: test the decision at your real expected move date. If buying only wins after a longer stay than you can commit to, renting may preserve flexibility.

What this calculator does not include: mortgage insurance, HOA fees, renovations, tax deductions, taxes on gains, rent control, moving costs, or personal lifestyle value. Buying and selling costs are fixed percentages; local costs can be higher or lower.

Mistakes to avoid

Do not compare rent only against the mortgage payment. Ownership also includes taxes, insurance, maintenance, and transaction costs. Another mistake is ignoring the renter's ability to invest the down payment and monthly savings.

Data sources

The housing-cost discussion is informed by the Consumer Financial Protection Bureau, which notes that ownership costs include more than mortgage principal and interest. This page compares modeled scenarios; it does not decide whether a home is affordable for a specific household.

For the broader decision guide, continue with the Rent vs Buy Guide. Walk worked scenarios in Rent vs Buy: A Real Scenario Walkthrough and Example: Rent or Buy if You May Move in 5 Years?.

Related models: Home Affordability · Emergency Fund · Future Wealth

Should I rent or buy a house?

The answer depends on mortgage rate, home price, down payment, expected appreciation, rent, how long you will stay, and the investment return you could earn by renting and investing instead. This tool helps compare the opportunity cost of buying a house against the long-term wealth path of renting.

Rent or buy FAQ

Is buying always better long term?

No. Buying can build equity, but high rates, taxes, insurance, maintenance, transaction costs, and low appreciation can make renting plus investing cheaper for some households.

What costs are not included?

This is a simplified model. It includes fixed-percentage buying and selling costs, property tax, insurance, maintenance and rent increases, but not mortgage insurance, HOA fees, tax deductions, taxes on gains, or personal lifestyle value. Treat it as a planning estimate, not a final homebuying decision. See our Calculator Methodology for how to interpret estimates.

To see the break-even year and results at several horizons side by side, use the rent or buy decision.

What if I plan to move soon?

Shorter stays often make renting more attractive because buying and selling costs have less time to spread out. If you may move within a few years, test a shorter horizon before assuming ownership wins.