Rent vs Buy Calculator
Last updated
Compare the true long-term cost of renting vs buying — including equity, opportunity cost, and all the hidden expenses.
Buying
Renting
Year-by-year comparison
| Year | Buying net cost | Renting net cost | Difference | Equity built |
|---|
Key metrics
Buying
Renting
Sensitivity analysis
| Appreciation scenario | Break-even | Buying net cost | Renting net cost | Winner at horizon |
|---|
What this means in real life
Questions to ask yourself
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Results are estimates for educational purposes only and are not financial advice. Rates and terms vary by lender and individual circumstances. See full disclosure.
Methodology
- Buying cost = down + closing costs + cumulative PITI + cumulative maintenance − net sale proceeds
- Net sale proceeds = equity − (home value × selling cost %)
- Renting cost = cumulative rent + insurance − investment portfolio value
- Portfolio = down payment compounded at return rate + monthly savings (PITI − rent difference, floored at 0) compounded monthly
- PMI cancels when remaining balance / home price ≤ 80%
- All costs in nominal dollars; no inflation adjustment
- Last updated: May 2026
Frequently asked questions
Is it better to rent or buy a home?
It depends on your timeline, local market, and financial situation. Buying builds equity but has high transaction costs — you typically need 5–7 years to break even. Renting preserves flexibility and lets you invest the down payment elsewhere.
What is the rent vs buy break-even point?
The break-even point is the year when total buying costs (mortgage, taxes, insurance, maintenance, minus equity built) fall below total renting costs (rent paid, minus investment returns on money not tied up in the home).
How does home appreciation affect the rent vs buy decision?
Higher appreciation favors buying; lower appreciation or flat markets often favor renting, especially short-term. The break-even year shifts significantly with even 1–2% differences in appreciation rate.
What maintenance costs should I budget for a home?
A common rule is 1% of home value per year for maintenance and repairs, though newer homes may be lower and older homes higher. On a $400,000 home, budget $4,000/year ($333/month). This covers routine repairs but not major systems replacement.
Does renting ever win financially over the long term?
Yes — in high-price markets with low appreciation, renting and investing the difference (down payment + monthly savings) can outperform buying, especially over shorter horizons. The math depends heavily on local appreciation rates, rent growth, and investment returns.
How do property taxes affect the rent vs buy comparison?
Property taxes are a direct cost of ownership with no equivalent in renting. High-tax states (NJ, IL, TX) make buying significantly more expensive. In low-tax states, buying looks relatively more attractive.
How this calculator works
Buying costs include mortgage interest, property tax, insurance, maintenance, and HOA, net of equity built through principal paydown. Renting costs include rent payments, compounded at the rent growth rate. The down payment opportunity cost is modeled as that amount invested at the specified return rate. Break-even is the first year buying cumulative cost falls below renting cumulative cost.
Sources & assumptions
- Historical home appreciation rate (3-4% national average) per Federal Housing Finance Agency HPI
- Maintenance cost estimate (1% of home value/year) per Harvard Joint Center for Housing Studies
- Opportunity cost modeled as S&P 500 long-run average return (~7% real)