Rent vs Buy Calculator
Compare the true cost of buying vs renting over your time horizon, including taxes, appreciation, and opportunity cost.
A rent vs buy calculator compares the true net cost of renting a home against buying a comparable one over the years you expect to stay, and finds the break-even year — the point after which buying becomes the cheaper path. The comparison is a horizon question, not a universal answer: buying front-loads large costs (down payment, closing costs) that are recovered only gradually through equity and appreciation, while renting stays cheap up front and lets the cash a buyer would sink into the house earn returns elsewhere. Stay long enough and buying usually overtakes; leave early and renting usually wins.
Enter your home price, mortgage terms, ownership costs, rent, and expected growth rates above. The tool builds both paths year by year and reports the net cost of each at your horizon, plus the break-even year if it arrives within it.
How it's calculated
Each path is tracked as a cumulative net cost:
Buy net cost = down payment + closing costs + mortgage payments + taxes and upkeep − equity (value − selling costs − loan balance)
Rent net cost = cumulative rent − investment gains on the cash not spent up front
The buy side simulates the mortgage month by month with the standard
annuity payment P · r / (1 − (1 + r)−n),
appreciates the home monthly, and accrues property tax and upkeep on
current value; the equity credit is what makes buying win over time. The
rent side grows rent annually and credits the renter the return their
preserved down-payment-and-closing cash earns — the opportunity cost that
keeps renting competitive. The break-even year is the first year the buy
net cost drops below the rent net cost. Full formulas are on our
methodology page; for the buy-side process
and cost checklists, the CFPB's
Buying a House
resources are the primary consumer reference.
Worked example: $400,000 home vs $2,200 rent over 10 years
Take the calculator's default scenario: a $400,000 home bought with 20% down at 6.5% over 30 years (P&I payment $2,022.62, up-front cash $92,000 including 3% closing costs), 1.1% property tax and 1.5% upkeep, 3% home appreciation, 6% selling costs — against $2,200 rent growing 3% a year, with 6% investment return on the renter's preserved cash. Computed with the same engine as the tool above:
| Year | Buy net cost | Rent net cost | Cheaper path |
|---|---|---|---|
| 1 | $55,829 | $20,726 | Renting, by $35,103 |
| 3 | $94,672 | $63,505 | Renting, by $31,167 |
| 5 | $132,311 | $108,067 | Renting, by $24,245 |
| 8 | $186,162 | $178,257 | Renting, by $7,905 |
| 9 | $203,325 | $202,540 | Renting, by $785 |
| 10 | $220,053 | $227,262 | Buying, by $7,209 |
The shape of the numbers is the lesson. Renting leads by $35,103 after year one — the buyer has paid $92,000 up front plus 6% selling costs shadowing any exit — and the gap then narrows every single year as equity builds and rent creeps up, collapsing to $785 by year 9 before flipping in year 10. A move at year 5 would leave the buyer roughly $24,000 worse off; staying past year 10 puts the buyer ahead and compounding. The break-even year is highly input-sensitive: nudge rent, appreciation, or the investment return and it can shift by years, which is why running your own numbers matters more than any rule of thumb.
When should you use this calculator?
Use it when you have a realistic price and a realistic rent for comparable homes in the same area and want the crossover year for your actual numbers. It is built for sensitivity testing: run pessimistic and optimistic appreciation (say 1% and 4%) and see how far the break-even moves; do the same with the investment return, which quietly drives the rent side. It also puts a number on flexibility — if your job or plans might move you within five years, the year-5 gap in the table above is the price of that uncertainty. And before an offer, it converts the monthly-payment framing a lender gives you into the total-cost framing the decision actually deserves.
The tool compares costs; it does not weigh the rest. Stability, schools, the freedom to renovate, landlord risk, and the discipline renting's "invest the difference" assumption requires are all real factors that sit outside the arithmetic.
Assumptions and limitations
- Appreciation, rent growth, and investment return are constant annual rates. Real markets are lumpy; a single bad year near your exit changes the buy side materially.
- The renter's opportunity-cost credit applies to the preserved up-front cash only, not to monthly cash-flow differences between the paths — a deliberate, documented simplification in the methodology.
- Tax effects are excluded on both sides: no mortgage-interest or property-tax deductions, no capital-gains treatment on the home sale or the renter's portfolio.
- Property tax and upkeep are flat percentages of current home value; PMI (typically required below 20% down), HOA dues, and major one-off repairs are not itemized — fold them into the upkeep rate.
- The mortgage is fixed-rate for the full term; refinancing mid-horizon is not modeled.
- Selling costs apply whenever the equity credit is computed, so the model always prices in a hypothetical sale at each year-end.
This page is educational content about how rent-versus-buy cost comparisons work. It is not financial advice and does not consider your personal circumstances. For decisions that matter, consult a qualified professional.
Last reviewed: 2026-07-09