Buy vs Rent Calculator
Compare the true financial outcome of buying versus renting over any time horizon — net worth, break-even year, and total costs side by side.
Enter Your Numbers
Adjust the defaults to match your situation. All fields are estimates — the result updates instantly.
1–30 years. Most people need at least 5–7 years for buying to break even.
= $90,000 down
Annual return on the down payment if invested instead.
Estimates are for educational purposes only · Actual results vary
Results After 10 Years
Based on your inputs — all figures are educational estimates.
Renting outperforms buying across the full 10-year period based on these assumptions. Results are sensitive to home appreciation and investment return assumptions.
Net worth = home equity minus estimated selling costs (buying) / invested portfolio (renting). All figures are estimates. Actual outcomes depend on market conditions, tax situation, and individual circumstances.
What Drives the Buy vs Rent Decision
The financial case for buying or renting depends heavily on these factors.
Buying has high upfront costs (down payment, closing costs). The longer you stay, the more those costs get amortized across years. Most people need 5–7 years to break even — shorter stays typically favor renting.
Rising home values build equity and improve the case for buying. Stagnant or falling markets reduce equity and can make renting more competitive. Local market trends matter more than national averages.
The down payment is a large sum. If invested rather than used to buy, it can generate significant returns. High investment return assumptions favor renting; low returns favor buying.
A useful rule of thumb: divide the home price by annual rent. A ratio under 15 generally favors buying; over 20 generally favors renting. High-cost markets (NYC, SF) often have ratios of 25–40, strongly favoring renting on pure financial terms.
Homeowners pay property taxes, insurance, and maintenance that renters do not. A 1% annual maintenance rate on a $450,000 home is $4,500/year — equivalent to $375/month — that often gets overlooked in simple comparisons.
Stability, customization, school districts, and the psychological value of ownership are real and significant. This calculator captures the financial math — the personal and lifestyle value of owning is not quantifiable but matters enormously for most people.
The Math Behind This Calculator
Each year, the calculator tracks two running totals and compares them:
- Buy Net Worth = Estimated Home Value − Remaining Loan Balance − Estimated Selling Costs
- Rent Net Worth = (Down Payment + Cumulative Monthly Savings) invested and compounded at your assumed return
Home value grows each year at your Home Appreciation %; the loan balance shrinks via standard mortgage amortization; and "monthly savings" is whatever renting costs less than buying each month (that difference gets invested alongside the down payment).
$450,000 home, 20% down ($90,000), 6.75% rate: monthly buying cost (P&I + tax + insurance + maintenance) ≈ $3,310/mo.
$2,400/mo rent + $20 renter's insurance = $2,420/mo.
Renting costs $890/mo less in year 1 — that $890, plus the $90,000 down payment, is what gets invested on the renting side.
Why the Monthly Cost Comparison Isn't the Whole Story
Look at the breakdown bars in the results above and it's tempting to just compare the two "Total" numbers and call it a day. But the buying side hides something the renting side doesn't: part of that Principal & Interest slice — the principal portion — isn't really a cost at all. It's forced savings that reduces your loan balance and becomes home equity you keep. Property tax, insurance, maintenance, and the interest portion of P&I are true costs with no payback, similar to how 100% of rent and renter's insurance produce no equity on the renting side.
That's why this calculator doesn't stop at monthly cost — it runs the full net worth comparison above, crediting buyers for the equity built into their payment and crediting renters for investing what they don't spend on housing. A lower monthly total on either side does not automatically mean a better financial outcome over time.
Quick Rules of Thumb
Before running the full numbers, these shortcuts give a fast signal.
Divide home price by annual rent. Under 15 = buying likely makes more sense. Over 20 = renting often wins financially. 15–20 = run the full calculation.
If you expect to stay fewer than 5 years, renting usually wins because buying costs (closing costs, commission, moving) are too large to recover quickly. This can extend to 7–10 years in high-cost markets.
Most lenders recommend keeping total housing costs (mortgage, taxes, insurance) under 28% of gross monthly income. If buying requires more, it may strain your budget even if it builds equity long-term.
Renters pay for housing without building equity — but owners pay mortgage interest, property taxes, insurance, and maintenance that also build no equity. A fair comparison accounts for all costs on both sides.
Frequently Asked Questions
How does the buy vs rent calculator work?
The calculator compares the total net worth outcome of buying versus renting over your chosen time horizon. For buying, it models mortgage payments, property taxes, insurance, maintenance, HOA, closing costs, home appreciation, and equity build-up. For renting, it models rent payments, renter's insurance, and the investment growth of the down payment and any monthly savings you would keep by renting instead of buying.
What is the break-even year?
The break-even year is the point at which buying produces a higher net worth than renting, accounting for all costs and investment returns on both sides. Before that year, renting may be the financially stronger choice. After it, buying typically builds more wealth. Break-even depends heavily on home appreciation, investment returns, and how long you stay in the home.
Is it always better to buy than rent?
Not always. Buying builds equity and benefits from home appreciation, but it also comes with significant upfront costs, ongoing maintenance, and reduced financial flexibility. Renting keeps capital liquid and allows you to invest the down payment elsewhere. In markets with high home prices relative to rents, and for people who may move within a few years, renting can produce equal or better financial outcomes.
What home appreciation rate should I use?
Historical US home appreciation has averaged around 3–4% annually over long periods, though it varies significantly by market and time period. Use your local market's historical average as a starting point, not a guarantee. The calculator lets you adjust this to see how sensitive the outcome is to appreciation.
What investment return rate should I use for the renting scenario?
The investment return rate represents what you could earn by investing the down payment (and any monthly savings from renting) in a diversified portfolio. Historical average US stock market returns are around 7–10% annually before inflation. A conservative estimate of 6–7% is common for planning purposes. Higher assumed returns favor renting; lower returns favor buying.
Does this calculator account for taxes?
This calculator does not account for the mortgage interest deduction, capital gains exclusion on home sales, or the tax treatment of investment gains. These factors can influence the relative outcome of buying vs renting but vary based on individual tax situations. Consult a tax professional for advice specific to your situation.
What is not included in this calculator?
This calculator does not model PMI (private mortgage insurance), rent-controlled apartments, short-term rental income, home equity lines of credit, refinancing, or the psychological and lifestyle value of homeownership. It also assumes consistent appreciation and investment returns — actual markets fluctuate.
This calculator provides educational estimates only. Actual outcomes depend on local market conditions, tax situation, investment performance, mortgage terms, and many personal factors. Always consult a licensed financial advisor, mortgage professional, and real estate agent before making a purchase decision.
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