Rent vs. Buy Calculator
Not just a payment comparison — a real net worth projection. See how your home equity and appreciation stack up against what a renter's down payment could earn if invested instead, and the exact year buying starts winning.
Your numbers
Fill in your real figures — every field affects the comparison.
Home purchase
Ongoing ownership costs
Renting
Market assumptions & horizon
Your results
Enter your numbers and click compare to see the breakdown.
Why a monthly payment comparison alone is misleading
The most common way people compare renting and buying is by holding a mortgage payment next to a rent check and picking whichever number is smaller. That comparison misses almost everything that actually determines the better financial outcome: the down payment tied up in the house, the appreciation that home builds over time, the transaction costs of buying and eventually selling, and — just as importantly — what a renter's unspent down payment could have earned if it had been invested instead.
This calculator instead projects your total net worth under each scenario at the end of your chosen time horizon, then tells you which path leaves you further ahead, and in which year the balance tips.
How this rent vs. buy calculator works (methodology)
The comparison runs a month-by-month simulation rather than a simplified formula, so the effects of amortization and compounding are captured accurately.
- Buying side: the calculator amortizes your mortgage month by month, tracks the home's value compounding at your assumed appreciation rate, and adds property tax, insurance, HOA, and maintenance as ongoing costs. At your time horizon, it estimates net proceeds as home value minus remaining mortgage balance minus selling costs.
- Renting side: your down payment and closing costs — the cash you would have spent on buying — are instead treated as an initial investment, growing at your assumed investment return rate.
- Monthly cash-flow difference: in any month where renting costs less than owning, the difference is added to the renter's investment balance; in any month where owning costs less, the difference is added to a parallel investment balance on the buying side. Both balances compound monthly.
- Optional tax modeling: if you indicate that you itemize deductions, the calculator applies your marginal tax rate to mortgage interest and property tax (capped at the $10,000 SALT limit) to estimate the tax savings buyers may see — since most U.S. filers now take the standard deduction, this is off by default.
- Breakeven detection: the calculator checks each year of the simulation and reports the first year in which buying's net worth overtakes renting's, if that happens within your chosen horizon.
| Factor | Buying | Renting |
|---|---|---|
| Upfront cost | Down payment + closing costs (often 5–8% of price) | Security deposit only, typically 1 month's rent |
| Builds equity | Yes, as principal is paid down | No, but freed-up cash can be invested instead |
| Exposure to price growth | Full exposure to local home value changes | None — instead exposed to investment market returns |
| Flexibility | Lower — selling costs and time make moving expensive | Higher — typically one lease term to exit |
| Ongoing costs | Property tax, insurance, maintenance, HOA on top of mortgage | Rent increases annually, renters insurance is inexpensive |
The breakeven year is the number that actually matters
Because closing costs and selling costs are paid regardless of how long you own a home, buying almost always looks worse than renting in year one. The question isn't whether buying costs more upfront — it does — but whether you'll stay long enough for equity and appreciation to close that gap. Run the calculator above at your realistic time horizon, not an idealized one, to see whether your specific numbers clear that bar.
Rule of thumb, not a substitute for the math: many housing economists cite roughly five years as a rough minimum stay for buying to typically make financial sense, but this varies enormously with local home prices, mortgage rates, and rent levels — which is exactly why a horizon-specific calculation beats a generic rule.
The single assumption that changes everything: investment return rate
Of every input in this calculator, the investment return rate you assume for a renter's alternative use of cash has the largest effect on the outcome. A renter who could reliably earn 8–10% annually in a diversified portfolio needs a much stronger case for buying than one who would otherwise leave that money in a low-yield savings account. Because nobody can know future market returns with certainty, it's worth running the comparison at a conservative rate (around 4–5%) and a more optimistic one (around 8–9%) to see how sensitive your personal breakeven year really is.
Other assumptions worth stress-testing
- Home appreciation rate — try your local market's recent multi-year average rather than a national figure, since real estate appreciation varies widely by metro area.
- Rent growth rate — in high-demand rental markets, annual increases can outpace the 3% default; check recent listings in your area for a more accurate figure.
- Maintenance percentage — older homes, larger homes, and homes with pools or extensive landscaping often run above the commonly cited 1% of value per year.
Built on net worth, not payment size
Follows the same opportunity-cost methodology used by economists and financial planners, not a simplified rent-vs-mortgage comparison.
Private by design
Every calculation happens in your browser with JavaScript. Your financial details are never transmitted or stored anywhere.
Transparent assumptions
Every input — appreciation, investment return, tax treatment — is visible and editable, so you can see exactly what's driving the result.
Common mistakes when comparing rent vs. buy
Ignoring the opportunity cost of the down payment. A down payment sitting in home equity isn't earning a market return — treating it as "free" money you'd otherwise have spent anyway understates renting's true competitiveness.
Forgetting maintenance and repairs. Unlike rent, a mortgage payment doesn't cover a failed water heater or a new roof. Budgeting the commonly used 1% of home value per year for maintenance avoids an unpleasant surprise.
Assuming you'll definitely stay long enough. Job changes, family circumstances, and life changes are common. If your breakeven year is close to or beyond your realistic time horizon, the safer financial choice is often to rent until your plans firm up.
Double-counting the tax deduction. Since the standard deduction was raised substantially, most homeowners no longer itemize, so the mortgage interest deduction provides little or no additional tax benefit for them. Only enable the itemization toggle if you genuinely expect to itemize.
Frequently asked questions
A properly built rent vs buy calculator does not just compare a monthly mortgage payment to monthly rent. It projects your net worth forward under each scenario: for buying, that means home equity plus home appreciation minus selling costs; for renting, that means what your down payment and any monthly savings would be worth if invested instead. Whichever scenario leaves you with more net worth at your chosen time horizon is the financially stronger choice for that specific time frame.
The breakeven point is the first year in which owning a home produces more net worth than renting and investing the difference would have. Before the breakeven year, upfront costs like the down payment and closing costs put buyers behind. After it, home equity and appreciation typically overtake the renter's invested savings. Homes with high transaction costs relative to price tend to have a longer breakeven period.
Buying a home typically involves closing costs of roughly two to five percent of the purchase price, and selling it later typically costs another five to six percent in agent commissions and fees. Together, these transaction costs can total eight to eleven percent of the home's value, which is why buying only makes financial sense if you plan to stay long enough for appreciation and equity to outweigh those one-time costs.
Only if you actually itemize deductions on your federal tax return, since most U.S. households now take the standard deduction instead. Since the standard deduction increased substantially, itemizing typically only benefits homeowners with a large mortgage balance, high state and local taxes, or other significant deductions. This calculator includes an optional toggle so you can see the comparison both with and without that tax benefit.
Significantly. The investment return rate represents what a renter could earn by investing their down payment and any monthly savings instead of putting them into a house. A higher assumed return rate makes renting look more attractive, since the renter's alternative investment grows faster, while a lower assumed return rate favors buying. Because this single assumption swings the outcome so much, it's worth testing a conservative and an optimistic rate to see how sensitive your specific decision is.
Yes. You can set an annual home appreciation rate, and the calculator compounds it monthly to project the home's future value, which affects both the equity a buyer builds and the estimated selling costs at the end of the time horizon. A commonly used long-run historical average for U.S. home price appreciation is in the range of three to four percent per year, though this varies significantly by region and time period.
Run the calculator at a few different time horizons, such as three, five, seven, and ten years, and compare the breakeven year to each. If your likely breakeven year is well beyond how long you realistically expect to stay, renting is probably the financially safer choice, since an early, forced sale would likely happen before transaction costs have been recovered.
No. This calculator runs entirely in your web browser using JavaScript. The figures you enter are never sent to a server, stored in a database, or shared with any third party. Closing or refreshing the page clears everything.
This calculator and its underlying formulas are reviewed for accuracy on an ongoing basis. It is provided for educational and planning purposes and does not constitute individualized financial, tax, or real estate advice — for a decision specific to your situation, consider speaking with a licensed financial advisor, tax professional, or mortgage lender.