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Rent vs. buy calculator

Buying isn’t always cheaper than renting — it depends how long you stay. This compares the true cost of each over your timeline and finds the year buying pulls ahead.

Buying wins —

Net cost to buy: —
Net cost to rent: —
Breakeven point: —

Net cost over time — where the lines cross is your breakeven

Cost of renting Cost of buying

Why renting versus buying comes down to how long you stay

The oldest line in housing — that renting is “throwing money away” — is misleading. Renting buys you flexibility and shields you from repairs, property taxes, and a falling market. Buying can build wealth, but it loads most of its cost into the moment you walk in and the moment you walk out. The question isn’t which one is morally better; it’s which one is cheaper for your timeline. And the single biggest lever on that answer is how many years you plan to stay.

That’s the idea of the breakeven point. Buying starts in a deep hole — closing costs going in, and agent and sale costs you’ll eventually pay coming out. Renting starts cheap. As the years pass, you chip away at the mortgage, the home appreciates, and rising rent makes renting more expensive, so the two paths slowly converge and then cross. Before that crossing year, renting wins; after it, buying does. The whole point is to find your crossing year before you sign anything.

How the calculator models it

The tool runs a month-by-month simulation of both choices over your time horizon and compares the true net cost of each. On the buying side it adds up your mortgage payments, property taxes, insurance, and maintenance, plus the closing costs to purchase and the agent and sale costs when you sell — then subtracts the equity you keep and the appreciation the home has gained. What’s left is the real cost of having owned.

On the renting side it tallies your rent, grown each year by the rate you set, and then subtracts the growth on the money you didn’t spend on a down payment and closing costs — because a renter can invest that lump sum instead. That’s the honest comparison: not rent versus a mortgage payment, but the full cost of owning versus the full cost of renting while investing the difference.

How to use this calculator

Every input maps to a real number you can look up or estimate:

Home price and down payment %. What you’d pay and how much you’d put down up front.
Rate and property tax %. Your mortgage rate and your local annual property tax rate on the home’s value.
Appreciation. How fast you expect the home’s value to grow per year — long-run averages tend to sit near the rate of inflation.
Monthly rent and rent growth. What you’d pay to rent a comparable place and how fast that rent climbs each year.
Investment return. What the down payment could earn if you rented and invested it instead.
Years in the home. How long you plan to stay — the lever that moves the answer most.

A worked example

Picture a $400,000 home with 20% down — an $80,000 down payment plus roughly $12,000 in closing costs to get in the door. Plan to stay seven years and, with a typical rate and modest appreciation, owning often edges out renting: you’ve had time to build equity and ride some appreciation, and rising rent has made the alternative pricier. Now cut the stay to three years and the picture flips. You’ve barely dented the loan, you’ve paid the same hefty closing costs, and you owe around 6% in selling costs on the way out — costs a short stay can’t spread thin. The shorter you plan to stay, the harder renting and investing the difference is to beat.

The costs people forget when buying

Most rent-versus-buy gut checks compare monthly rent to a monthly mortgage payment and stop there. That skips the costs that actually decide it. Closing costs run around 3% of the price going in. Selling costs — agent commissions and fees — run roughly 6% coming out. Maintenance quietly eats about 1% of the home’s value every year, and that’s before a roof or furnace surprises you. Then there’s the opportunity cost of the down payment: tens of thousands of dollars locked in your walls instead of invested. Add property taxes and insurance and the “cheaper” option is rarely as obvious as the payment comparison suggests.

Related tools & guides

Once you’ve decided buying makes sense for your timeline, size the loan with the mortgage calculator and check how much house you can afford with the affordability calculator. Already own and weighing a lower rate? Run the numbers through the refinance calculator. To see what the down payment could become if you rented and invested it, use the investment growth calculator, or browse the full set of money calculators. For the bigger picture, read whether buying a house is a good investment and the surprise hidden costs of buying a home. This tool is for education, not financial advice.

Rent vs. buy FAQ

Is it cheaper to rent or buy?

It depends almost entirely on how long you stay. Buying carries big one-time costs — closing fees going in, agent and sale costs coming out — that only get cheap when spread over many years. In the first few years renting is usually cheaper; the longer you stay, the more buying tends to win as you pay down the loan and the home appreciates. This calculator finds the year the two cross for your numbers.

How long do I need to stay for buying to pay off?

A common rule of thumb is five to seven years, but the honest answer is “it depends.” The breakeven shifts with your mortgage rate, home price, how fast rent rises, and what you could earn investing the down payment instead. Enter your real figures and the tool shows the exact breakeven year rather than a generic guess.

What is the breakeven point?

The breakeven point is the year at which the total net cost of buying drops below the total net cost of renting. Before it, renting and investing the difference comes out cheaper; after it, owning pulls ahead. On the chart it’s simply where the rent line and the buy line cross.

Does buying always build wealth?

No. Owning can build wealth through paying down the loan and home appreciation, but it isn’t guaranteed. If you sell within a few years, closing and selling costs can wipe out any equity you built, and home values can fall as well as rise. A renter who consistently invests the money they didn’t tie up in a down payment can build wealth too.

What costs do people forget when buying?

The big ones are the transaction costs: roughly 3% in closing costs when you buy and around 6% in agent and sale costs when you sell. People also underestimate ongoing maintenance — budget about 1% of the home’s value a year — plus property taxes and insurance. And there’s the opportunity cost of the down payment, which could have been invested instead.

Should I invest the down payment if I rent?

That’s the fair comparison this calculator makes. Renting only comes out ahead if you actually invest the money you would have sunk into a down payment and closing costs, rather than spending it. If that lump sum grows at a reasonable return, it offsets a lot of rent — but only if you really set it aside instead of letting it leak into everyday spending.