π Rent vs Buy Calculator
Compare renting vs buying year by year and find your break-even year.
Buying details
Renting details
Verdict
How to Use This Calculator
Most rent vs buy comparisons stop at monthly payments, which hides the real story: the down payment you could have invested, the equity you build over time, and the costs of owning that never show up in a mortgage quote. This calculator compares the two paths as wealth outcomes, year by year, so you can see exactly when buying pulls ahead.
Enter the home price and the down payment you would actually put down. The calculator assumes the renter invests that same amount instead.
Fill in the mortgage rate and term, plus the real ownership costs: property tax, insurance, HOA, maintenance (1% per year is a common starting point), and one-time closing costs.
Enter your current rent and how fast you expect it to grow, plus the investment return you would earn on money you do not spend on a house.
Set how many years you realistically plan to stay. The break-even year tells you the minimum horizon that makes buying the wealthier choice.
The Math Behind the Comparison
The key fairness rule: both sides start with the same money. The buyer spends the down payment and closing costs on day one; the renter invests that exact amount. Each year, whichever option costs less out of pocket has its savings invested at your assumed return. The "net cost" figures already subtract wealth built, so a lower number means you are richer, not just that you spent less. Note this model ignores income taxes (mortgage interest deduction, capital gains) to keep the comparison clean; in reality taxes usually tilt things slightly toward buying.
Worked Example
Take a $400,000 home with $80,000 down (20%), a 6.5% 30-year mortgage, 1.1% property tax, $1,800 yearly insurance, no HOA, 1% maintenance, 2% closing costs, and 3% appreciation. Comparable rent is $2,200 per month growing 3% a year, and investments return 7%.
The monthly principal and interest payment works out to about $2,022.62. Add tax ($366.67), insurance ($150), and maintenance ($333.33) and the true monthly ownership cost is about $2,872.95, or $34,471 per year. After year one, the loan balance is about $316,423 and the home is worth $412,000, leaving roughly $95,577 in equity. Buyer net cost after year one: $88,000 upfront + $34,471 cash - $95,577 equity = about $26,895. The renter paid $26,400 in rent but the invested $88,000 grew to $94,160, and the $8,071 of monthly savings (ownership cost minus rent) stayed invested, for a renter net cost of about -$75,831. Negative means the renter is wealthier at this point. The year-by-year table shows renting ahead for the first 19 years; buying finally pulls ahead in year 20. If you will move within 10 years, renting clearly wins in this scenario.
What the Break-Even Year Really Means
The break-even year is your decision in one number. If you will stay longer than it, buying builds more wealth; if you will move sooner, renting does. A few things that move it earlier: lower home prices relative to rent, lower mortgage rates, a bigger down payment, and slower rent growth. Things that push it later: high closing costs, pricey HOAs, high property taxes, and high investment returns (because the renter's invested money compounds faster).
Two honest caveats. First, the investment return assumption does a lot of work. If you would actually spend the savings instead of investing them, the renter side of this model is too generous, and buying wins much sooner. Second, this compares wealth, not happiness. Owning gives stability, control over your space, and protection from rent hikes. Renting gives mobility and a landlord who fixes the roof. Run the numbers, then weigh what the numbers cannot measure.
These are estimates for planning, not financial advice. Assumptions about appreciation, rent growth, and investment returns drive the result, and real markets do not move in smooth lines. Use this to understand the tradeoffs, then talk to a qualified professional before making a major housing decision.
Frequently Asked Questions
Is renting really throwing money away?
Not necessarily. Rent buys you a place to live, flexibility, and freedom from maintenance bills, property taxes, and market risk. The real question is what happens to the money you would have spent on a down payment and the monthly gap between owning and renting. If you invest the down payment and the monthly savings at a decent return, renting can build serious wealth, especially in the early years when most of a mortgage payment goes to interest.
What is the 5% rule for renting vs buying?
The 5% rule is a quick sanity check: multiply the home price by 5% and divide by 12. If the monthly rent for a comparable home is well below that number, renting is probably the better deal; if rent is above it, buying deserves a closer look. On a $400,000 home, 5% is $1,667 per month. The rule bundles property tax, maintenance, and the cost of capital into one rough number, but it is only a starting point. The calculator above runs the full year-by-year math.
When does buying beat renting?
Buying usually wins when you stay put long enough for appreciation and principal paydown to overcome the upfront costs (down payment, closing costs) and the slow early years of an amortization schedule. With typical assumptions that break-even point often lands between 5 and 10 years, but high prices, high rates, or fast-rising rents can push it much later or earlier. This calculator finds your exact break-even year.
What costs do first-time buyers forget?
Closing costs (typically 2 to 5% of the price), maintenance (budget about 1% of the home value per year), homeowners insurance, property tax increases, HOA dues and special assessments, moving costs, and the furnishings and repairs a new place always seems to need. Together these can add thousands per year to the true cost of owning, which is why this calculator includes all of them.
Should I buy if I might move in a few years?
Probably not, unless you plan to keep the home as a rental. Selling within a few years means agent commissions (often around 6% total) and closing costs eat most or all of your equity, and the early mortgage years build very little principal. As a rule of thumb, if your horizon is under 5 years, run this calculator carefully and be honest about how long you will really stay.