Rent vs Buy Calculator
Compare the true cost of renting against buying over the years you plan to stay, including the investment return on money you do not tie up in a home.
Buying
$80,000 down
Renting
Investing
The return earned on cash not locked into a home (the down payment, closing costs, and any monthly savings).
Where Your Owning Money Goes (5 yr)
Principal and appreciation come back to you at sale; interest, tax, insurance, maintenance, HOA, and fees do not.
Net Worth Over Time: Buy vs Rent
Net worth assumes you sell the home at the end of each year (buy line) or cash out your portfolio (rent line). Where the lines cross is the break-even point.
Year-by-Year Breakdown
| Year | Home Value | Loan Balance | Rent Paid | Buy Net Worth | Rent Net Worth |
|---|---|---|---|---|---|
| 1 | $414,000 | $316,423 | $24,180 | $72,737 | $108,497 |
| 2 | $428,490 | $312,607 | $49,080 | $90,174 | $125,624 |
| 3 | $443,487 | $308,535 | $74,722 | $108,343 | $143,412 |
| 4 | $459,009 | $304,191 | $101,127 | $127,278 | $161,890 |
| 5 | $475,075 | $299,555 | $128,319 | $147,015 | $181,092 |
| 6 | $491,702 | $294,609 | $156,322 | $167,591 | $201,050 |
| 7 | $508,912 | $289,332 | $185,159 | $189,045 | $221,800 |
| 8 | $526,724 | $283,701 | $214,856 | $211,419 | $243,381 |
| 9 | $545,159 | $277,694 | $245,439 | $234,756 | $265,831 |
| 10 | $564,240 | $271,284 | $276,933 | $259,102 | $289,193 |
Estimate only - not financial, tax, or legal advice. Real results depend on local taxes, loan terms, market conditions, and the mortgage interest and property tax deductions, which this model does not itemize. Figures use general assumptions; confirm numbers with a licensed professional.
How to read your rent vs buy result
Start with the years you plan to stay, since that single input drives the answer more than any other. Set a realistic home price, rent, and mortgage rate, then look at the break-even year on the chart. If it lands after you expect to move, renting and investing the difference is likely the stronger play. If your stay comfortably clears the break-even year, buying starts to build lasting equity. Always test a few appreciation and rent-growth scenarios, because the result swings hard on assumptions no one can predict.
Guide
How it works
Renting is not throwing money away, and buying is not automatically building wealth. The honest comparison is what each path does to your net worth over the years you actually plan to stay. This calculator runs both paths month by month and lines them up on the same yardstick.
On the buying side it tracks your mortgage (splitting each payment into interest and principal), property tax, insurance, maintenance, HOA, and PMI if your down payment is under 20%. The home appreciates each year. When you sell, you get back the sale price minus selling costs and the remaining loan balance. That recovered equity is the real payoff of owning.
On the renting side it tracks rent that rises each year plus renters insurance. The key fairness step is the opportunity cost of cash: a buyer locks a large down payment and closing costs into the house, so the renter is assumed to invest that same money instead. Each month whichever option costs less invests the difference, so both people spend exactly the same. At the end, the renter cashes out their portfolio. Comparing the two final net worth figures is the result.
The break-even point is the year buying first overtakes renting. Below it, the upfront and transaction costs of owning have not yet been outweighed by equity and appreciation, so renting and investing wins. The classic rule of thumb is that buying tends to pay off only if you stay five years or more, but as you will see, your own numbers can push that line in either direction.
Is renting really just throwing money away?expand_more
No. Rent buys you housing, flexibility, and zero exposure to maintenance, property tax, and market risk. The fair question is not rent versus a mortgage payment, but the total cost of owning (interest, tax, insurance, upkeep, and transaction costs that you never get back) against rent, after accounting for the investment return a renter earns on the down payment they did not spend. Over short stays, renting often comes out ahead.
Why does the calculator assume the renter invests money?expand_more
Because a buyer ties up a large down payment and closing costs in the house, while a renter keeps that cash. To compare the two paths fairly, the renter is assumed to invest that lump sum, plus any month where renting costs less than owning. Ignoring this opportunity cost would unfairly favor buying. The investment return slider lets you set how that money grows, often a stock index assumption of 5 to 7 percent.
What is the break-even point?expand_more
It is the number of years you need to own before buying overtakes renting in net worth. Buying carries heavy upfront costs (down payment, closing) and exit costs (agent commission, transfer fees), so it takes time for equity and appreciation to overcome them. If you move before the break-even year, renting usually leaves you richer. Staying past it tilts the math toward buying.
Does this include the mortgage interest tax deduction?expand_more
No. Since the 2018 standard deduction increase, most households no longer itemize, so including the deduction by default would overstate the benefit of buying for most people. If you itemize and your mortgage interest and property tax exceed the standard deduction, owning looks somewhat better than shown here. Treat the result as a pre-tax comparison and consult a tax professional for your situation.
What home appreciation and rent growth should I use?expand_more
Long-run US home prices have risen roughly 3 to 4 percent a year on average, though local markets vary widely and can fall. Rents have historically grown around 3 percent annually. These are defaults, not predictions. Because the result is sensitive to these rates, try a pessimistic and an optimistic case rather than trusting a single number.
Why does my monthly owning cost look higher than rent?expand_more
The full cost of owning is far more than the mortgage payment. Property tax, insurance, maintenance, HOA, and PMI often add 40 to 60 percent on top of principal and interest. The calculator shows your true first-month owning cost so you can compare it honestly against rent, not just the loan payment a lender quotes.
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