Rent vs Buy Calculator
Compare the financial math of renting versus buying a home. Adjust assumptions for home price, down payment, mortgage rate, rent, and time horizon to see which option aligns with your financial picture. This is an educational tool — not a recommendation.
Compare Rent vs Buy
Adjust assumptions below to see how the math compares over time.
Adjust inputs above to compare renting vs buying over your chosen time horizon.
Key Factors in the Rent vs Buy Decision
Time Horizon
How long you plan to stay in the home is often the single most important factor. Buying involves significant upfront costs (closing costs, typically 2–5% of the price) and selling costs (typically 5–6% of the sale price). These costs are spread over your years of ownership — the longer you stay, the smaller their annual impact.
Monthly Cost Comparison
The monthly cost of owning includes principal and interest, property taxes, homeowners insurance, maintenance reserves, HOA fees, and potentially PMI. Renting includes monthly rent and renter's insurance. In many markets, the monthly cost of buying exceeds renting for comparable homes, especially when mortgage rates are elevated.
Opportunity Cost
Money used for a down payment and closing costs cannot be invested elsewhere. Conversely, if renting costs less than buying each month, those monthly savings can be invested. This calculator models both scenarios: your down payment invested in the market and any monthly savings from renting also invested, helping you compare total net worth outcomes.
Home Appreciation
Over time, homes generally increase in value. The calculator assumes a default annual appreciation rate of 3.5%, based on long-term national averages. Local markets vary significantly — some areas have appreciated much faster, while others have seen periods of flat or declining values. Adjust this assumption to match your local market expectations.
Rent Inflation
Rents tend to rise over time. The calculator assumes a default annual rent increase of 3%, which approximates long-term national averages. In high-demand markets, rent growth can outpace this significantly. Rising rent costs are one reason buying can become more favorable over longer time horizons, as your mortgage payment remains fixed (for fixed-rate loans) while rent escalates.
Tax Considerations
Homeownership offers potential tax benefits: the mortgage interest deduction (if you itemize), property tax deduction (subject to SALT cap), and the primary residence capital gains exclusion ($250K single / $500K married). However, after the 2017 tax law changes, fewer than 10% of taxpayers itemize deductions. This calculator includes simplified federal tax estimates. State taxes are not modeled.
Rent vs Buy Handbook
Understanding the financial trade-offs between renting and homeownership
What this engine does
This comparison calculator models the full financial picture of renting versus buying a home over any chosen time horizon. Unlike simple monthly payment comparisons, it accounts for upfront costs (down payment, closing costs, security deposits), ongoing costs (mortgage, taxes, insurance, maintenance, HOA, rent, rent increases), and opportunity cost (what your money could earn if invested instead of tied up in a home). The result shows you the break-even year, year-by-year net worth comparison, and which option leaves you better off financially under your chosen assumptions.
When to deploy this tool
Use this calculator when you are trying to decide between continuing to rent or buying a home. It is most useful early in your decision-making process, before you start touring homes or applying for mortgages. The calculator is also valuable when considering a move: if you already own a home and are deciding whether to sell and rent or buy a new property. Adjusting the time horizon slider can help you understand how long you would need to stay in a home for buying to make financial sense.
How Calculations Work
The calculator runs two parallel financial models over your chosen time horizon. On the buy side, it amortizes the mortgage (principal and interest), adds property taxes, insurance, maintenance (at your chosen percentage), HOA fees, and PMI (if down payment is below 20%). It projects home appreciation and calculates net equity at exit after subtracting selling costs and applicable capital gains taxes. On the rent side, it models rent payments with annual increases, renter's insurance, and invests your down payment plus any monthly savings from renting into an investment portfolio at your chosen return rate. It then compares the after-tax net worth from both paths to determine the break-even point.
Common Strategic Pitfalls
A common mistake is comparing the mortgage payment alone against rent without including taxes, insurance, maintenance, and HOA. The true monthly cost of owning is significantly higher than P&I alone. Another frequent error is underestimating how long you will stay. Many buyers sell within 5-7 years, which is often before the break-even point — especially when mortgage rates are elevated. Overestimating home appreciation or underestimating maintenance costs can also lead to overly optimistic buy conclusions. Finally, renters often forget to account for rent increases over time, which can make buying more attractive over longer horizons.
Sources & Assumptions
Calculations are based on industry-standard financial models. To review the mathematical formulas and verification reports in detail, visit our dedicated Financial Methodology page.
Pre-populated data reflects estimated national averages sourced from county tax agencies and regional insurance reports. Homeowners can customize these percentages inside advanced settings cards.
PMI is modeled at 0.75% of the initial loan principal annually for LTV ratios exceeding 80%, automatically terminating in calculations when the outstanding loan balance drops to or below 80% of the initial purchase price.
Frequently Asked Questions
How does the rent vs buy calculator work?
This calculator compares the total financial outcome of buying a home versus renting over a time period you choose. For buying, it models the mortgage payment (principal and interest), property taxes, insurance, maintenance, HOA fees, PMI (if applicable), closing costs, and selling costs. For renting, it models monthly rent, rent increases, and renter's insurance. It also accounts for opportunity cost: your down payment and any monthly savings from renting are assumed to be invested at your chosen rate of return. The comparison shows which option leaves you with more net worth at the end of your time horizon.
What is the break-even year in rent vs buy?
The break-even year is the point at which buying a home becomes financially favorable compared to renting. In early years, buying typically costs more due to upfront closing costs and the fact that most of your mortgage payment goes toward interest rather than principal. Over time, home appreciation, principal paydown, and rent inflation can shift the balance. The break-even year varies significantly based on your home price, mortgage rate, down payment, rent costs, and how long you plan to stay.
Does the calculator account for tax benefits of homeownership?
The calculator includes simplified federal tax estimates. For homeowners, it models the primary residence capital gains exclusion (up to $250,000 for single filers, $500,000 for married filing jointly) and the ability to deduct mortgage interest and property taxes if you itemize deductions. For the rent scenario, it applies long-term capital gains tax (15%) on investment portfolio gains when liquidated. Tax calculations are simplified estimates and do not account for state taxes, AMT, or individual circumstances. Consult a CPA for your specific situation.
What is opportunity cost in this context?
Opportunity cost represents what you could have earned by investing your money elsewhere. When you buy a home, your down payment and closing costs are tied up in the property rather than invested in the stock market. When you rent, the calculator assumes your down payment is invested and earning compound returns at your chosen rate. If renting is cheaper monthly, those savings are also assumed to be invested. The opportunity cost comparison helps show the full financial picture beyond just monthly housing costs.
What down payment percentage do I need?
Down payment requirements vary by loan program. Conventional loans may accept as little as 3% down, FHA loans allow 3.5%, and VA and USDA loans may offer zero-down options. A down payment below 20% typically requires Private Mortgage Insurance (PMI), which increases your monthly payment. The calculator adds PMI when your down payment is below 20%. A 20% or higher down payment eliminates PMI and may result in more favorable loan terms.
Should I include maintenance costs when comparing?
Yes. Home maintenance is a real ongoing cost that renters do not face. A common guideline is to budget 1% to 2% of your home's value annually for maintenance and repairs. This covers everything from routine upkeep (lawn care, HVAC servicing) to major replacements (roof, HVAC system, water heater). The calculator uses 1% by default but you can adjust this based on the age and condition of the home you are considering.
Will this calculator tell me whether to rent or buy?
No. This calculator is an educational comparison tool that shows the financial math side of the rent versus buy decision. It does not recommend one option over the other. Many important factors are not captured in any calculator, including lifestyle preferences, job stability, family needs, desire for stability versus flexibility, and personal risk tolerance. Use this tool as one input among many in your decision-making process, and consult qualified real estate and financial professionals.
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Financial Disclaimer
This calculator is intended for planning and educational purposes only. It relies on assumptions and information provided by you regarding your goals, expectations, and financial situation. Results should not be used as your sole source of information. Outputs are estimates only and do not constitute a loan offer, financial advice, legal advice, tax advice, or solicitation. Consult qualified professionals before making financial decisions.