Rent vs Buy Calculator

Break-even analysis with opportunity cost, maintenance, and appreciation — get a clear verdict for your situation

Enter your numbers below to see your verdict.
🏠 Buying
$80,000 down payment
🏢 Renting
years
Typical 1–2% of home value/year
Closing costs, agent fees
Agent commission, title, etc.
Opportunity cost of down payment (S&P 500 avg ~7%)

Results at Year 10

🏠 Buying — Total Cost
🏢 Renting — Total Cost

Cumulative Net Cost Over Time

Buying
Renting
Copied!

How This Calculator Works

Most rent vs buy tools only compare the mortgage payment to rent. This calculator includes every major financial factor:

Buying side costs

  • Mortgage payments — principal and interest, calculated using standard amortization
  • Property taxes — annual % of home value
  • Homeowner's insurance — monthly premium
  • Maintenance & repairs — historically ~1–2% of home value per year
  • HOA/condo fees — if applicable
  • Transaction costs — buying (3–5%) and selling costs (5–7%) amortized over your analysis horizon
  • Opportunity cost — the investment return you forego by tying up capital in a down payment
  • Minus: equity built — principal paid down plus home appreciation

Renting side costs

  • Rent payments — growing annually at your specified rate
  • Renter's insurance — typically $10–20/month
  • Investment growth — the down payment stays invested and compounds

The break-even formula

We track cumulative net cost year by year. For buying, net cost = (mortgage + taxes + insurance + maintenance + HOA + transaction costs + opportunity cost foregone) − (equity: principal paydown + appreciation). For renting, net cost = (rent + renter's insurance) − (investment growth of down payment). The year where buying net cost first drops below renting net cost is the break-even year.

Renting vs Buying: Key Factors Beyond the Math

The numbers matter, but they're not everything. Here are the non-financial factors that often tip the decision:

When renting makes sense

  • You plan to move within 3–5 years (transaction costs aren't recovered)
  • Home prices in your area are very high relative to rents (high price-to-rent ratio)
  • Your job or personal situation may require relocation flexibility
  • You want to avoid maintenance responsibility and unexpected repair costs

When buying makes sense

  • You plan to stay 7+ years in the same area
  • Mortgage payments are close to or below local rents
  • You value stability, customization, and building equity
  • Local appreciation trends are strong historically

The price-to-rent ratio

Divide the home price by annual rent. A ratio below 15 generally favors buying; above 20 generally favors renting in the near term. This is a quick heuristic — the full calculator above gives you a precise answer for your numbers.

Looking to explore mortgage rates?

Compare current mortgage rates from lenders to see if a lower rate changes your break-even year. Even 0.5% can shift the verdict by 1–2 years.

Frequently Asked Questions

Should I rent or buy a house?
The answer depends on how long you plan to stay, your local market, mortgage rates, and the opportunity cost of a down payment. Generally, buying becomes financially advantageous after 5–10 years in most markets, but the calculator above gives you a precise break-even year for your specific situation.
What is opportunity cost in rent vs buy calculations?
Opportunity cost is the return you would have earned by investing your down payment in the stock market instead of using it for a home purchase. If your down payment is $80,000 and the market returns 7% annually, that's roughly $5,600/year not being earned — a real cost of buying that is often ignored in simple mortgage calculators.
What is the break-even year when buying a home?
The break-even year is the point at which the total cumulative cost of buying (mortgage, taxes, insurance, maintenance, minus equity) equals the total cumulative cost of renting. Before that year, renting is cheaper overall. After it, buying is the better financial choice — assuming you sell or stay at your analysis horizon.
Does home appreciation affect the rent vs buy decision?
Yes, significantly. Higher appreciation makes buying more attractive by building equity faster. However, appreciation rates vary widely by city and cycle — use conservative estimates (2–3%) for planning, not recent peak numbers.
What are the hidden costs of buying a home?
Beyond the mortgage: property taxes, homeowner's insurance, maintenance (typically 1–2% of home value/year), HOA fees, closing costs when buying (3–5%), and agent commission when selling (5–7%). Over a 10-year period, these can add $50,000–$150,000 to the cost of ownership on a $400,000 home.
Is renting throwing money away?
Not necessarily. When you rent, you're paying for housing — but you also keep your down payment invested, avoid maintenance costs, and maintain flexibility. Whether the equity you build outweighs what you'd earn investing the down payment depends on your market, rate environment, and time horizon.