Rent vs. Buy Calculator
Compare the multi-year financial outcome of renting versus buying — including home equity, appreciation, all carrying costs, rent growth, and the opportunity cost of investing your down payment instead.
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Disclaimer: This free tool is provided “as is,” without warranties of any kind, and is for general informational purposes only — not professional, legal, financial, medical, tax, or engineering advice. Results may contain errors; verify anything important independently and use at your own risk. We accept no liability for any loss or damage arising from its use. See our Terms of Use for details.
Step-by-Step Guide
Enter the home price, your down payment, the mortgage rate and term, and your estimated ongoing ownership costs: annual property tax rate, homeowners insurance, maintenance (typically 1–2% of home value per year), and HOA fees if any. Then enter the home's expected annual appreciation rate and your assumed investment return rate for the alternative scenario. On the renting side, enter your current monthly rent and the expected annual rent growth rate. Finally, choose a time horizon in years.
The calculator runs a year-by-year simulation for both paths. On the buying side it tracks mortgage principal paid down (growing equity), appreciation (growing home value), and all carrying costs paid out. On the renting side it tracks rent paid and models the down payment invested at your chosen return rate, growing in the stock market or another vehicle. The net position in each year is the financial outcome if you were to sell or liquidate at that point.
Interpreting the results
The break-even year is when the buyer's net position first exceeds the renter's. Before that year, renting and investing the down payment produces a better financial outcome. After it, ownership has built more net wealth. The verdict depends heavily on appreciation, investment return rate, and how long you stay — changing these assumptions can flip the conclusion, which is why the chart shows the full trajectory rather than just a single answer.
$400,000 home, $80,000 down (20%), 6.5% mortgage for 30 years, 1.2% property tax rate, 0.8% insurance and maintenance, 4% annual appreciation vs. $2,000/month rent growing at 3%/year, with the $80,000 down payment invested at 7%. Over 5 years, renting and investing typically comes out ahead because ownership costs are high relative to the equity built; by years 7–10 the buyer often overtakes the renter as appreciation compounds and the loan balance falls — the chart shows the exact cross-over point for your specific numbers.
Who it's for
Renters weighing a first purchase, relocating professionals, and personal-finance planners.
Core Features
- Year-by-year net-position simulation for both renting and buying.
- Counts home equity and appreciation against all buying carrying costs.
- Models the renter investing the down payment, with rent growth over time.
- Reports the break-even year, the net-worth difference, and a per-year chart.
🛡️ No tracking — your inputs, keys, and details never leave this client sandbox.
Does this calculator tell me whether to rent or buy?
It models the financial outcome of each path over the horizon you choose, but the 'right' answer depends on assumptions you control — especially home appreciation, investment return, and how long you stay. Small changes in these inputs can shift the break-even year by several years. Use it to understand the key variables driving the decision rather than to get a definitive verdict, and remember that non-financial factors (stability, flexibility, personal preference) are often equally important.
What is the opportunity cost of the down payment?
When you buy, the down payment is tied up in home equity earning whatever the home appreciates at. When you rent, that same cash can be invested in a diversified portfolio potentially earning a different return. The calculator models this by tracking the down payment invested at your chosen rate on the renting side — giving the renter a head start in assets that compounds over the horizon. This opportunity cost is one of the biggest factors that makes renting financially competitive in the short term.
Why does buying usually win over a long enough horizon?
Over a long horizon, two forces favor buying: the mortgage balance declines while the home value (hopefully) rises, compounding the equity gain; and rent grows over time while the fixed-rate mortgage payment stays constant, so the buyer's housing cost becomes relatively cheaper year by year. The renter's invested down payment also compounds, but if home appreciation exceeds the investment return, the buyer eventually pulls ahead.
What maintenance rate should I use?
A common rule of thumb is 1% of the home's value per year for maintenance and repairs. Older homes, certain climates, and properties with pools or large systems may run higher. This cost is often underestimated by first-time buyers — a $400,000 home at 1% is $4,000 a year, or $333 a month, which is a significant addition to the ownership cost stack.
The cost of getting rent-vs-buy wrong
People on both sides of this debate get it wrong in ways that cost them significant money. Buyers who purchase when they plan to move in three years typically lose money after accounting for closing costs, agent commissions, and the interest-heavy early years of the mortgage. Renters who stay out of the market for a decade in an appreciating city give up compounding equity gains that the stock market may not fully offset. The stakes are high enough that this deserves more than a gut feeling — and the math is complex enough that intuition reliably misleads.
What the model actually calculates
The calculator tracks the net financial position of two parallel paths from the same starting point. The buyer's net position in any given year is: home value at that point minus remaining mortgage balance minus estimated selling costs (agent commissions, closing fees). The renter's net position is: the down payment invested at the assumed return rate, compounding year by year, plus any difference between rent paid and what the buyer paid in carrying costs — invested too if the renter's total cost is lower. The year those two lines cross is the break-even point.
The variables that change the answer the most
Home appreciation rate is the dominant variable on long horizons. The difference between 2% and 5% annual appreciation on a $400,000 home over 15 years is nearly $250,000 in equity. Investment return on the down payment is the renter's key variable — a stronger stock market performance makes renting more competitive. How long you stay determines whether transaction costs (typically 7–10% of the purchase price between buying and selling) have time to be recovered. Property tax rates, which vary from under 0.5% to over 3% of home value depending on location, can make two otherwise similar homes in different cities produce completely different break-even timelines.
Why the break-even year matters more than the monthly comparison
Buyers often anchor on whether the monthly mortgage payment is lower than rent. That comparison ignores maintenance (1–2% of home value annually), property taxes, insurance, and the opportunity cost of the down payment. The break-even year — when buying's cumulative net position first exceeds renting's — is the number that actually answers the question, because it accounts for all of these factors compounded over time.