Rent vs Buy Calculator
Compare the true cost of renting against buying, including closing costs, opportunity cost and a break-even year — the minimum time you would need to stay for buying to win.
How to use this calculator
- 1Enter the purchase details for buying and the rent for a comparable home.
- 2Set an honest expected investment return for the money not spent on a down payment — this is the single most influential assumption.
- 3Try several comparison periods; buying usually needs several years to overtake renting because of upfront costs.
How the calculation works
Buying net worth = Home value − Remaining mortgage balance
Renting net worth = FV(down payment + monthly cost differential, invested)- Home value
- Purchase price grown at the assumed appreciation rate
- Cost differential
- What buying costs each month (P&I + tax + maintenance) minus rent
This models opportunity cost directly: the down payment you would have paid is instead invested for the renter, and whichever side is cheaper in a given month invests the difference.
Both home appreciation and the alternative investment return are simulated monthly, compounding throughout the comparison period.
Worked example
A $400,000 home vs. $2,200 rent, over 10 years
- 1.The mortgage payment on $320,000 at 6.5% over 30 years is $2,022.62. Closing costs at 3% of the $400,000 price add $12,000, paid in cash alongside the $80,000 down payment.
- 2.Adding property tax ($366.67/month), maintenance ($333.33/month) and insurance ($116.67/month) brings the first month’s buying cost to $2,839.29 — about $639.29 more than the starting $2,200 rent.
- 3.The renting side invests the $80,000 down payment plus the $12,000 buying would have spent on closing costs, plus that monthly gap, at 6% a year. The buying side builds equity as the $400,000 home appreciates at 3% a year while the mortgage balance falls — but a hypothetical sale would also cost 6% of the sale price in agent fees.
- 4.After 10 years: home equity is about $268,458 on a home worth about $539,741 with $271,283 still owed, minus about $32,384 in selling costs, for a net $236,074. The renting investment has grown to about $238,759.
- 5.Renting is ahead by about $2,686 at year 10 — close enough to be a toss-up. Running the simulation onward, buying's net worth overtakes renting's at year 11 and stays ahead after that.
Result: Renting ahead by about $2,686 after 10 years; break-even for buying is 11 years
What the decision is really weighing
On the surface, rent versus buy looks like a comparison between two monthly payments, but that framing misses most of what actually separates the two. Renting converts housing into a pure, predictable expense with no ownership stake at the end of it. Buying converts part of that same monthly outlay into equity — a claim on an asset that, historically, tends to hold or grow its value — while tying up a large upfront sum that could otherwise have been invested elsewhere. The honest comparison is not "rent versus mortgage payment" but "the total cost and wealth outcome of each path, including what the money not spent on a down payment could have earned instead."
The real cost of owning, beyond principal and interest
A mortgage payment is only the most visible piece of what owning a home costs each month.
- Property tax — billed by local government, typically as a percentage of the property’s assessed value, and due regardless of whether the mortgage is paid off.
- Homeowners insurance — required by virtually every mortgage lender, and continues even after the mortgage itself is paid off.
- Maintenance and repairs — a cost renters rarely see directly, since it falls on the landlord — a commonly used planning rule budgets roughly one percent of the home’s value per year for this.
- Closing costs — fees paid when the purchase completes — legal, lender and inspection costs among them, typically 2–5% of the price — which need to be recovered through appreciation or savings before buying is unambiguously ahead of renting.
- Selling costs — agent commissions and other fees paid when eventually selling, typically 5–6% of the sale price, which is exactly what pushes the break-even point out past the first year or two even in a rising market.
The real cost of renting, beyond the check you write
Renting has its own less visible costs: no equity accumulates no matter how long the tenancy lasts, rent tends to rise over time with no ceiling tied to what was originally paid, and a landlord retains the right to decline lease renewal or sell the property. Against that, renting keeps capital free rather than locked into a single illiquid asset, avoids maintenance costs and the risk of falling property values, and offers a flexibility to relocate that owning does not.
Why the down payment is the crux of the comparison
A down payment is capital committed to a house instead of being invested somewhere else — and that forgone return is a genuine cost of buying, even though it never appears on any mortgage statement. A fair comparison has to credit the renting scenario with what that same sum could have earned if invested, which is exactly the mechanism this calculator uses: the down payment, and any month where renting is cheaper than owning, are treated as invested on the renting side, rather than simply assuming a mortgage payment and a rent payment are the whole story.
Why the break-even point matters more than any single year
Closing costs and selling costs are both one-off, front- and back-loaded charges, which means buying almost always looks worse than renting in year one and better the longer you stay — the fixed costs of the transaction get spread over more years of equity growth. The break-even point is the year that crossover happens: the minimum time you would need to stay in the home for buying to have been the better financial choice.
This is why "should I buy or rent" is really a question about how long you expect to stay, not just about monthly payments. Someone confident they will be in the same home for fifteen years and someone who expects to relocate in two years can face the identical monthly numbers and reach opposite conclusions rationally.
What the math can’t capture
Even a careful financial comparison leaves out real considerations that carry weight for many people: the stability of not facing a lease non-renewal, the freedom to renovate or decorate without a landlord’s approval, the practical ease of relocating for a job without selling a property first, and for some, the forced-savings discipline of a mortgage payment that a rent payment does not provide. None of these show up in a net-worth projection, but they are frequently what actually tips the decision once the numbers are close.
What this assumes, and where it stops
Assumptions
- Home value and rent both grow smoothly at the stated annual rate.
- The investment return applies consistently to the down payment, buying closing costs, and any monthly savings.
- Closing costs are paid in cash at purchase, not rolled into the loan. Selling costs are only deducted from buying's net worth for the "if sold now" figures — if you have no intention of ever selling, buying's true position is somewhat better than shown.
- No renovation or refinancing within the comparison period.
Limitations
- Tax treatment of mortgage interest, property tax deductibility and capital gains exclusions vary by jurisdiction and are not modelled — in the US since 2018, most filers take the standard deduction and see no marginal benefit from mortgage interest, but for those who do itemize, buying is somewhat better than shown here.
- The break-even year is found by simulating up to 30 years (or your chosen comparison period if longer) — a genuine break-even further out than that will show as "not within 30 years" rather than a specific year.
- The non-financial value of stability, flexibility to move, and control over a space you own are real considerations this cannot quantify.
Common questions
Is buying always better in the long run?
Not automatically — it depends heavily on the relationship between home appreciation, mortgage rate, and what alternative investments would return. In markets with slow appreciation and low rent relative to home prices, renting and investing the difference can outperform buying even over long periods. Run the numbers for your specific market rather than assuming.
Why does the down payment matter so much to the comparison?
Because it is capital you are choosing to lock into a house rather than invest elsewhere. That forgone return is a real cost of buying, even though it never appears on a mortgage statement — which is exactly why the comparison must include it to be fair.
What does the break-even point actually tell me?
It is the minimum number of years you would need to stay in the home for buying's net worth (after selling costs) to overtake renting's. Closing costs and selling costs are both one-off charges that only pay for themselves the longer you own, so buying almost always trails renting in the early years even when it wins eventually.
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
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