Rent vs Buy Calculator

Two ending balances, never two monthly payments

Both sides finish as a balance rather than a bill: home equity net of selling costs on one side, an invested portfolio on the other. Whichever is larger at your chosen horizon wins — a different question from which option has the lower monthly payment, and one the two answers routinely disagree on.

The headline states which path leaves you wealthier at the horizon you chose, and by how much. The breakeven year — the first year buying's running wealth overtakes renting's — matters more than the single horizon number, because it tells you how long you'd need to stay for buying to actually pay off; if your horizon is shorter than the breakeven year, renting currently wins in this model, and if it's longer, buying does. The year-by-year table underneath shows exactly how both paths grow, so you can see whether the gap is widening or narrowing rather than trusting a single endpoint.

The invested difference is what keeps the comparison honest. A renter who spends everything they save on lifestyle upgrades will obviously finish behind a buyer accumulating equity, so the fair version assumes the renter invests the down payment they did not spend, plus any cash flow renting leaves each year, at a market-like return. Lowering that return models a renter who saves less diligently; the grid below shows how far the single assumption moves the verdict.

Renting wins by $22,000 at year 7 and buying wins by $270,000 at year 30

A $420,000 home with 20% down ($84,000, plus $12,600 in closing costs at 3%), a 6.5% mortgage over 30 years ($2,124/mo principal & interest), 1.1% property tax, $1,800/yr insurance, 1% maintenance, and 3.5% annual appreciation — compared against $2,200/mo rent growing 3% a year, with the difference invested at a 6% return. Over a 7-year horizon, renting comes out about $22,000 ahead ($193,000 buyer wealth vs. $215,000 renter wealth) — the down payment, closing costs, and early interest-heavy mortgage years weigh on buying at first. Run the same assumptions out to 30 years and buying overtakes renting around year 12, then pulls further ahead as the fixed mortgage payment stops rising while rent keeps growing — by year 30, buyer wealth is roughly $1.10 million against $830,000 for renting.

How long you need to stay for buying to make sense is exactly what the breakeven year answers, and it is not a fixed number. It moves with the down payment, the mortgage rate, appreciation and the assumed return, which is why the tables below scan those assumptions instead of quoting a rule of thumb.

Buying does not always build more wealth than renting — this is a genuinely contested question in personal finance, not a settled one. With a high assumed investment return and a short horizon, renting and investing the difference comes out ahead, because closing costs, selling costs and the interest-heavy early years of a mortgage all weigh against buying at the start. Over longer horizons the fixed mortgage payment stops rising while rent keeps growing, and appreciation compounds on the whole house rather than on your share of it. That reversal is the entire reason one set of assumptions names renting the winner at year 7 and buying the winner at year 30.

The breakeven year across five price-to-rent ratios

Price-to-rent is the purchase price divided by a year of rent for the same place. Holding the $420,000 purchase fixed and moving only the comparable rent, the buyer ends year 10 with $266,132 on every row — only the renter's side moves.

The defaults sit at 15.9 ($2,200 against $420,000), breaking even in year 12. The collapse between 16 and 18 is steep: year 20 at a ratio of 17, and nothing inside 40 years at 18. That is where the received wisdom about high price-to-rent markets comes from.

Breakeven year at each pairing of appreciation and investment return

These two assumptions move the answer further than anything else on the page. Each cell is the first year buying overtakes renting, with everything else held at the defaults.

Read down the 6% column: half a point of appreciation moves the breakeven year four to five years. Read across the 3.5% row: two whole points of investment return move it five, and a third pushes it out of range entirely. Appreciation is the assumption to be careful with — and at an 8% return only the 5% row catches up at all.

None of this is a guess you are stuck with: change any input above — a different down payment, a shorter horizon, a higher or lower return — and the comparison recalculates instantly. Run a few realistic ranges rather than one figure, because as this grid shows, the winner flips well inside a plausible range.

What it costs to leave: selling costs and the years they add

Selling costs are charged once, on the way out, against the appreciated price — so a higher rate both cuts the proceeds and pushes the breakeven year back.

Each point of selling cost is worth about $5,344 at year 7 and pushes breakeven back roughly a year — one point of the sale price, compounded forward. It is also the only input in this table a negotiated commission can actually change.

Closing costs are the mirror charge, taken at the start instead of the end: typically a few percent of the price, covering loan fees, title insurance, inspections and prepaid taxes and insurance. Selling costs are usually dominated by agent commission. Both vary by location and by negotiation, so the defaults here are reasonable starting points rather than quotes for your market.

Together those two charges are why a lease is easier to leave than a house. Buying and selling again inside a few years is expensive once both are counted, whatever the comparison says at a longer horizon — and that flexibility is worth something this tool does not price in, just as the stability of owning is.

Property tax and maintenance ride the home price up; insurance and HOA do not

Property tax and maintenance are charged here as a percentage of the current, appreciating home value each year rather than of the original purchase price — realistic in most U.S. states, and it means both bills grow every year the house does. Home insurance and HOA fees behave the opposite way: they are held at the figure you enter for the whole horizon. Some states also cap how fast a home’s assessed value, and therefore its property tax, may rise while market value climbs faster; this calculator does not model that cap, so it can overstate property tax for a long-time owner there.

Everything the model holds still while you move one input:

• The renter invests the down payment and closing costs they didn’t spend on a home, plus (or minus) the difference between the yearly cost of owning and the yearly rent, at the investment return rate you enter.
• Property tax and maintenance are modeled as a percentage of the CURRENT, appreciating home value each year, not the original purchase price.
• The mortgage is a standard fixed-rate loan; principal and interest are calculated month by month, the same way a real amortization schedule works.
• Selling costs (agent commission, etc.) are paid once, out of the sale proceeds, in the year you plan to move.
• Results are estimates from the values you enter — not a forecast of real home prices, rents, or investment returns.

The mortgage-interest deduction is missing here, and it only ever helps buying

Deducting mortgage interest and property tax helps only if you itemize, and whether itemizing beats the standard deduction depends on your filing status, your other deductions and the tax year — too much variation to model generically. Leaving it out is deliberately conservative: if you do itemize, your real result is better for buying than anything on this page shows, and your real breakeven year is earlier than the tables above report.

Not every omission runs that way, so read the direction of each rather than a single margin of error. The missing deduction and the uncapped property tax both understate buying; holding insurance and HOA flat runs the other way and flatters it; the constant rates favour neither side, and only smooth a curve real markets deliver unevenly.

The limitations worth stating plainly before you quote a number from this page:

• Does not model the mortgage-interest or property-tax deduction — for a filer who itemizes, buying is somewhat cheaper than shown here.
• Does not model property-tax caps some jurisdictions apply to reassessed value (e.g. California’s Prop 13), which would slow property-tax growth for a long-time owner.
• Assumes a constant mortgage rate, appreciation rate, rent growth rate, and investment return for the whole horizon — real markets move unevenly year to year.
• Home insurance and HOA fees are held flat; in practice both tend to rise over a long horizon.
• Does not account for renter’s insurance, moving costs, or the value of flexibility (or stability) itself — only the financial totals.

This is a comparison, not a forecast. It cannot tell you what home prices, rents or markets will do — only what your own assumptions imply about them.

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Read the guide

For the payment side of this comparison worked through step by step, see Mortgage Payment vs. Total Cost of a Loan.

Sources

• Consider whether it's the right time for you to buy — Consumer Financial Protection Bureau
• What are some of the financial considerations of buying a home? — Consumer Financial Protection Bureau
• Making the decision to rent or buy — Consumer Financial Protection Bureau