Rent vs. Buy Calculator
Compare the total cost of renting against buying over a chosen time horizon.
Your Details
How It Works
- Enter your current or expected rent.
- Enter the home price, down payment, and mortgage rate you're considering.
- Choose a time horizon and press Calculate.
Formula Used
Good to Know
- • Assumes 3% annual rent growth and home appreciation you set.
- • Buying usually needs a longer time horizon to overcome upfront costs.
Important Notes
- • Doesn't include closing costs, selling costs, or renter's insurance vs. homeowner's insurance.
- • Home appreciation is never guaranteed.
Why the Time Horizon Changes the Answer
Buying comes with upfront costs (down payment, closing costs) that renting doesn't, so buying usually needs several years to "break even" against renting before the equity built and potential appreciation outweigh those upfront costs and the added expenses of ownership. A short expected stay often favors renting; a longer one often favors buying, all else equal.
What This Comparison Simplifies
This calculator captures the core trade-off — rent payments vs. mortgage payments, maintenance, and equity built — but leaves out some real-world factors: property tax and insurance (partially reflected in the maintenance estimate), the opportunity cost of the down payment if invested instead, and closing/selling costs. It's a solid starting comparison, best paired with your own specific numbers for those additional factors.
Key Concepts Explained
- Opportunity cost — what a down payment could have earned if invested instead of put toward a home.
- Break-even horizon — how many years of ownership it takes for buying to beat renting financially.
Bringing the Math to Life: A 5-Year vs. 10-Year Stay
Comparing $2,000/month rent against a $380,000 home with a $60,000 down payment at 6.5%:
At 10 years: buying typically pulls ahead as equity and appreciation accumulate
The exact crossover point depends heavily on local rent growth, home appreciation assumptions, and mortgage rate — but the general pattern holds broadly: buying rewards a longer expected stay, while renting is often more flexible and cost-effective for shorter time horizons.
Break-Even Horizon Table
| Years Staying | Typically Favors |
|---|---|
| 1-3 years | Renting |
| 4-6 years | Depends on local market |
| 7+ years | Buying |
Things to Get Right Comparing Rent vs. Buy
- Ignoring the opportunity cost of the down payment — that cash could otherwise be invested.
- Assuming home appreciation is guaranteed — values can decline, especially short-term.