Rent vs Buy Calculator
Compare renting vs buying over 5-10 years — break-even year, net cost, and recommendation.
Written by Golam Rabbani, Founder & Lead Engineer
How to use this rent vs buy calculator
- Set the horizon (5–10 years is the typical window) and an expected investment return on cash you would otherwise have to invest.
- In the Buying panel, enter home price, down payment, mortgage rate, term, property tax %, insurance per year, monthly HOA, maintenance %, expected appreciation %, and selling cost %.
- In the Renting panel, enter the monthly rent, expected annual rent increase, and renter's insurance.
- Press Calculate to see total buy cost, total rent cost, net cost after equity, break-even year, and a per-year cumulative table.
- Use Copy to save the comparison.
About this rent vs buy calculator
A rent-vs-buy calculator quantifies the multi-year cost of two paths — owning a home versus renting and investing the difference — and reports a break-even year and recommendation. For buying it accumulates: down payment + monthly P&I + property tax + insurance + HOA + maintenance, while the home appreciates and the loan amortizes. At each year it computes "net cost if you sold today" = cumulative outlay − (home value − remaining loan − selling cost) + opportunity cost of the down payment growing at your stated investment rate. Renting accumulates rent (compounded by the annual increase) plus renter's insurance. Mortgage P&I uses M = P × r(1+r)^n / ((1+r)^n − 1).
For example, a $400,000 home with 20% down, 6.5% mortgage rate over 30 years, 1.2% property tax, $1,200/yr insurance, 1% annual maintenance, 3% appreciation, and 6% selling cost — versus $2,200/mo rent rising 3% per year, with the down payment otherwise growing at 5% — typically reaches break-even around year 5–7. Below the break-even year, renting plus investing the down payment is cheaper; beyond it, buying pulls ahead. The New York Times "Is It Better to Rent or Buy?" calculator and the U.S. Consumer Financial Protection Bureau guides at consumerfinance.gov/owning-a-home use the same framework.
This tool is for estimation only and is not financial advice — consult a qualified financial advisor before making a housing decision based on these results.
FAQ
- What is the "break-even year"?
- The first year at which the cumulative net cost of buying (cumulative outlay minus the equity you would walk away with at sale, plus the opportunity cost of the down payment) becomes less than the cumulative cost of renting. If break-even is "beyond horizon", renting wins inside your chosen window.
- Why include opportunity cost on the down payment?
- Because a renter could invest that lump sum. Ignoring its growth makes buying look artificially better. The investment return % you enter is the assumed compound annual return on that money in stocks, bonds, or HYSA — pick a realistic, conservative number.
- How is home appreciation handled?
- The home value compounds at your chosen annual appreciation rate. At the comparison year, the tool computes the sale-net equity as (home value − remaining loan balance − selling-cost % × home value).
- Does this include tax benefits like mortgage interest deduction?
- No — tax treatment of homeownership varies hugely by country, state, and your individual return. Add it manually if it materially changes your situation, or talk to a tax advisor.
- Why does maintenance scale with home value?
- Industry rules of thumb (e.g. Freddie Mac, Fannie Mae homeownership guides) suggest annual maintenance averages roughly 1% of the home's current value. The tool re-prices this each year as the home appreciates.
- Should I rely on this to decide?
- Use it for estimation only. It is sensitive to your assumed appreciation, investment return, and rent-increase rates. Run several scenarios — pessimistic, base, optimistic — and consult a qualified financial advisor before committing.