Rent vs Buy Calculator
Make an informed decision between renting and buying a home.
Home Purchase Details
Monthly Ownership Costs
Rental Costs
Financial Assumptions
One-Time Costs & Taxes
Paid when buying (typically 2-5%)
Agent commission + fees when selling (typically 6-8%)
One-time cost when buying
Used for the itemized-vs-standard tax comparison
Recommendation
Monthly Cost Difference
Buying costs more
Net Worth Difference
After 7 years
Break-even Point
Buying does not stay ahead within 7 years
How it works
This calculator compares the total cost of renting versus owning over the years you'll stay. Buying carries big upfront and recurring costs (down payment, closing costs, mortgage interest, taxes, maintenance) but builds equity and may appreciate. Renting is cheaper short-term but builds none. The output is a break-even point — how long until buying comes out ahead.
Net cost of buying vs renting
Net buy cost = upfront + payments + tax + upkeep − (equity built + appreciation) Compare against cumulative rent
- upfront
- down payment + closing costs (~2–5%)
- equity + appreciation
- principal paid down + value gained, recovered at sale
Worked example
- Buying costs more in years 1–3 (closing costs, mostly-interest payments)
- Equity and appreciation accumulate over time
- Cumulative buy cost falls below cumulative rent at the break-even year
Typically break-even lands around 4–6 years — below that, renting usually wins.
Good to know
- The “5-year rule” is a rough guide: if you'll move sooner, renting often wins because buying's transaction costs are spread over too few years.
- Count the opportunity cost of the down payment — money tied up in a home could have been invested instead.
- Selling costs (~6% agent + fees) are real and eat into your equity, so they belong in the comparison.
Related Calculators
Frequently Asked Questions
What does the break-even point mean in a rent vs buy comparison?
The break-even point is the year from which buying leaves you with more net worth than renting — after counting the down payment, closing costs, mortgage interest, taxes, maintenance, AND the cost of selling the home (typically 6-8% of its value). Because those transaction costs are large, buying usually needs about 5-8 years to come out ahead. If you might move sooner, renting often wins.
What is the 5% rule for renting vs buying?
The 5% rule estimates the unrecoverable annual costs of owning at about 5% of the home's value: roughly 1% property tax, 1% maintenance, and 3% cost of capital (mortgage interest and the return your down payment could have earned). Divide by 12 for a monthly figure — if comparable rent is below that number, renting is likely the better financial deal; above it, buying looks better.
Which homeownership costs do renters avoid?
Renters skip property taxes, homeowner's insurance (renter's insurance is far cheaper), all maintenance and repairs (typically 1-2% of home value per year), HOA fees, PMI, closing costs when buying, and the 6-8% selling costs when moving. The rent check is the renter's ceiling, while a mortgage payment is the owner's floor — taxes, upkeep, and surprise repairs come on top of it.
What is the opportunity cost of a down payment?
Money locked into a down payment cannot be invested elsewhere. A $80,000 down payment invested at 7% would grow to about $112,000 in five years — that forgone growth is a real cost of buying. A fair rent vs buy comparison credits the renter with investing the down payment and closing costs, which is exactly what this calculator does.
When does renting beat buying financially?
Renting tends to win when you will stay fewer than about 5 years (transaction costs dominate), when price-to-rent ratios are high (above roughly 20), when mortgage rates are high relative to rent growth, when you can reliably invest the savings at a good return, or when your income or location is uncertain. Buying tends to win with long stays, strong local appreciation, and rents that rise faster than ownership costs.