Rent vs. Buy Calculator

Compare the true long-term cost of renting vs. buying — including equity, opportunity cost, maintenance, and selling costs. Find your break-even year.

True Cost of Buying —

Compare Renting vs. Buying

Buying

Home Price

Down Payment

Mortgage Rate

Property Tax Rate (annual)

Homeowner's Insurance (annual)

Maintenance & Repairs (annual % of home value)

Typical range: 1–2% per year.

HOA Fees (monthly, if applicable)

Home Appreciation Rate (annual)

The Case-Shiller national index rose about 4.7% a year from 2000 to mid-2026.

Renting

Monthly Rent

Annual Rent Increase

Assumptions

Investment Return Rate (if renting)

Applied to the down payment invested upfront, plus any months where renting costs less than buying.

Time Horizon

Buying Closing Costs

Selling Costs (agent + closing)

Agent commissions (negotiable) plus closing costs and any transfer tax.

Mortgage interest tax deduction

Only applies if you itemize deductions.

Enter your details above to compare renting vs. buying.

Methodology & Sources

Data current as ofSeptember 2026· Last reviewed: September 2026

Compares the full lifetime cost of buying (down payment + closing + PITI + maintenance + selling costs − sale proceeds) vs. renting (rent + opportunity cost on the avoided down payment + growth on money the renter invests) and reports the break-even year — the point at which buying becomes cheaper than renting.

▸ Formulas used

Buying net cost = down payment + closing costs + Σ monthly PITI payments + Σ maintenance + Σ HOA + selling costs − home sale proceeds − growth on any monthly surplus the buyer invests.
Home sale proceeds = (original price × (1+appreciation)^years) × (1 − selling cost percentage) − remaining mortgage balance.
Renting net cost = Σ monthly rent (compounded by rent inflation) − (avoided down payment grown at investment return rate) − growth on any monthly surplus the renter invests.
Break-even year = smallest year N where cumulative buying net cost ≤ cumulative renting net cost.
Opportunity cost is modeled SYMMETRICALLY, which is the part most rent-vs-buy comparisons leave out. The down payment is treated as if invested instead, so renting wins the time-value of that capital. But each month the side with the smaller outlay also invests the difference: when owning costs more than renting the renter invests the gap, and when rent exceeds the ownership payment the buyer invests it. Both portfolios compound at the investment return you enter.
Because investment growth is netted off, a "true cost" can come out NEGATIVE. That is not an error — it means that side finished ahead, with portfolio growth exceeding what they paid out over the period.

▸ Assumptions & limitations

Home appreciation and rent inflation are constant year-over-year — real markets fluctuate, sometimes dramatically. For reference, the S&P CoreLogic Case-Shiller national index rose about 4.7% a year from January 2000 to June 2026. Local results differ materially.
Selling costs are a percentage of the sale price, 7% as the placeholder. Commissions are negotiable and transfer taxes vary by state, so use a local figure if you have one.
Maintenance estimated at 1% of home value per year — a common benchmark, but actual costs cluster around major repair events (roof, HVAC, water heater) and can be materially higher in older homes.
Property tax + homeowners insurance held constant — both typically rise. Property tax rate uses your input rate against the (unchanging) original price, not the (rising) market value, which approximates assessment caps in some states but underestimates tax growth in others.
PMI is charged below 20% down at 0.85% of the original loan a year and removed once the balance falls to 80% of the purchase price, as if you request cancellation then (it ends automatically at 78%).
Investment return for the rent-side opportunity cost assumes consistent compound growth — no tax drag, no volatility. Enter a nominal (not inflation-adjusted) after-tax return, since home appreciation and rent increases are nominal too.
The optional mortgage interest deduction credits all interest at your marginal rate. That overstates it unless your itemized deductions already exceed the standard deduction without the mortgage. Does NOT model: the capital-gains exclusion on a primary residence ($250K/$500K), moving costs, reset costs of selling and re-buying mid-horizon, or rental income from a future move-out.

▸ Primary sources

Results are estimates based on the rates you enter. Home prices, rents, and investment returns do not grow at steady rates. This calculator does not provide financial advice.

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How This Calculator Works

Most rent vs. buy calculators only compare your monthly rent to your mortgage payment — which is misleading. This calculator computes the true net cost of each path over your time horizon:

Buying net cost = down payment + closing costs + all mortgage payments + property tax + insurance + maintenance + HOA + selling costs − home sale proceeds
Renting net cost = total rent paid − investment growth on the down payment and any monthly savings (when buying costs more per month, the renter invests the difference)

The break-even point is the year when the cumulative net cost of buying drops below the cumulative net cost of renting. Before that year, renting is cheaper on a true cost basis. After it, buying is cheaper.

The Opportunity Cost of a Down Payment

One of the most overlooked costs of buying is opportunity cost — what your down payment could have earned if invested instead. A $80,000 down payment invested at 7% annually grows to about $157,000 in 10 years. That growth is a real financial advantage of renting that most comparisons ignore.

This doesn't mean renting is always better — home equity builds too, and home appreciation can exceed stock market returns in some markets. The calculator accounts for both sides.

What the Monthly Comparison Misses

A mortgage payment may be lower than rent in some markets, but it's not your true cost of owning. Homeowners also pay:

Property taxes: Effective rates run from under 0.5% to over 2% of home value a year, depending on where you live.
Insurance: Premiums vary widely by state and have risen in recent years; get a quote for the home you are considering.
Maintenance: Budget 1–2% of home value annually — $4,000–$8,000 a year on a $400,000 home, though actual spending comes in lumps when a roof or furnace needs replacing.
PMI: If your down payment is less than 20%, you'll pay private mortgage insurance — often roughly 0.5–1.5% of the loan a year — until you can cancel it at 80% of the original value or it ends automatically at 78%.
Transaction costs: Closing costs when buying are commonly 2–5% of the price, and selling costs several percent more in commissions and fees. On a $400,000 home, 3% to buy and 7% to sell is $40,000 that appreciation has to recover.

When Buying Makes More Sense

You plan to stay for 5+ years (longer = more favorable for buying)
Local home prices are expected to appreciate steadily
Mortgage payments are comparable to local rents
You value stability, customization, and building equity

When Renting Makes More Sense

You may need to move within 3–5 years
Home prices are very high relative to rents (high price-to-rent ratio)
You would invest the down payment at a high expected return
You value flexibility and lower financial risk

Frequently Asked Questions

Is it better to rent or buy a home?

It depends on how long you plan to stay, local home prices, mortgage rates, and what you would do with the down payment instead. The longer you stay, the more time appreciation and loan paydown have to recover the costs of buying and selling, so short stays usually favor renting. Where the break-even year falls depends heavily on local prices and rents; this calculator finds it for your numbers.

What is the break-even point for buying vs. renting?

The break-even point is the number of years after which the total cost of buying (including mortgage, taxes, insurance, maintenance, and selling costs, minus equity) becomes lower than the total cost of renting (plus the investment return you would have earned on the down payment). It varies widely by market and by the rates you assume.

What costs should I include when buying a home?

Beyond the mortgage payment, homeowners pay property taxes, homeowner's insurance, HOA fees (if applicable), maintenance and repairs (typically 1–2% of home value per year), and closing costs when buying (2–5%) and selling (mostly agent commissions, which are negotiable, plus closing fees).

What is opportunity cost in rent vs. buy decisions?

Opportunity cost is what your down payment and closing costs could have earned if invested instead of used to buy a home. If you put $80,000 down, that money could have grown in the stock market. This is a real cost of buying that is often overlooked. This calculator accounts for it by comparing your home equity to what that same money would have grown to if invested.

How does home appreciation affect the rent vs. buy decision?

Home appreciation builds equity over time, which reduces the true cost of buying. Higher appreciation rates make buying more attractive. However, appreciation is not guaranteed and varies by market. The U.S. national average has been roughly 3–4% annually over the long run, but specific markets have seen much higher or lower rates.