Rent vs Buy Calculator

There is no universal answer - it turns on how long you stay, how fast homes appreciate versus what your invested savings could earn, and the gap between rent and the true cost of owning. This calculator settles it for your numbers by comparing net worth: the buyer’s home equity plus side savings against the renter’s invested portfolio. Buying tends to win the longer you stay and the more homes appreciate; renting wins for short stays or when rent is cheap relative to ownership.

It is the year the buyer’s net worth catches up to the renter’s. Before it, the renter is ahead because buying’s big upfront and exit costs have not been outrun; after it, the buyer pulls away as equity builds and rent keeps rising. This tool finds that year for your inputs - and if buying never catches up within your planned stay, it tells you that plainly instead of assuming you should buy.

A common rule of thumb is five years, but it is only a rule of thumb - the real number depends on your rent, price, rates, and appreciation. Closing costs to buy and roughly 6% to sell mean you start deep in the hole; it takes years of equity and rising rents to climb out. Run your actual figures and read the break-even year rather than trusting a blanket number.

No more than mortgage interest, property tax, insurance, and maintenance are - those are money out the door for owners too, and in the early years of a mortgage most of your payment is interest, not equity. The honest comparison is total wealth built either way, which is exactly what this calculator measures. Renting only loses when you fail to invest the money you did not tie up in a house.

Yes - that is the piece most free calculators skip. The renter here starts by investing the whole down payment plus the closing costs a buyer would have spent, and keeps investing whenever renting costs less than owning. Ignoring that invested down payment is the single biggest way rent-vs-buy math gets rigged in favor of buying.

Use what you would realistically earn on the money instead of a house - a diversified stock portfolio has historically returned about 7% after inflation, though many people hold bonds or cash that earn less. The higher the return you can get elsewhere, the better renting looks, because the down payment works harder invested. Try a conservative and an optimistic figure to bracket the answer.

Usually not. A short horizon is where buying loses most reliably: you pay 2-5% to get in and about 6% to get out, and a few years of modest appreciation rarely covers that round trip. If a job change or life move within five years is likely, renting keeps you flexible and typically keeps you wealthier - the calculator will show the renter ahead at short stays.

A lot, and they are why the break-even is measured in years, not months. Buying costs run 2-5% of the price; selling runs about 6% between the agent commission and closing. On a $400,000 home that is well over $30,000 round-trip - a hole the buyer has to dig out of before ownership starts winning. This calculator counts both, which pushes the break-even later than optimistic tools suggest.

Not automatically. A home is a leveraged, illiquid, concentrated bet on one property in one town, bundled with real carrying costs - taxes, insurance, and maintenance that average around 1% of value a year. It often works out, especially over long holds in appreciating areas, but treating it as a guaranteed investment is how people get burned in flat or falling markets. Compare it honestly against investing the difference.

They matter less than they used to. Since the 2017 standard-deduction increase, the large majority of homeowners take the standard deduction and get no marginal benefit from the mortgage-interest or property-tax deductions. This calculator deliberately leaves tax deductions out to stay honest for most filers; if you itemize and are in a high bracket, ownership looks somewhat better than shown here.