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Rent vs Buy Calculator
Compare the true long-term cost of renting versus buying a home and find your break-even year.
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Break-Even Year
5-Year Buy Cost (Net)
5-Year Rent Cost
10-Year Buy Cost (Net)
Calculated in your browser. We never see your numbers.
Year-by-Year Comparison
Cumulative net costs for buying versus renting over your first 10 years. Negative buy costs indicate that built equity exceeds total expenses paid to date.
| Year | Cumulative Buy Cost (Net) | Cumulative Rent Cost | Difference (Buy − Rent) |
|---|
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How to Use This Calculator
Enter your home purchase details — price, down payment, interest rate, and loan term — along with your current monthly rent and expected annual increases. Adjust the home appreciation rate, investment return (opportunity cost of your down payment), property tax, maintenance, insurance, and closing costs to match your market. Click Calculate to see your break-even year and a year-by-year cost comparison table.
The Rent vs Buy Formula Explained
The calculator computes cumulative net costs for each side. Buy cost = closing costs + all mortgage payments + maintenance + insurance + property tax − equity (home value minus remaining loan balance). Rent cost = total rent paid + opportunity cost of down payment (what it would have grown to at your investment return rate). The break-even year is the first year buy cost falls below rent cost. Before that year, renting is cheaper on a net basis; after it, owning is cheaper.
Key Factors That Affect Your Break-Even Year
The break-even year is highly sensitive to a few key variables. Home appreciation rate is the biggest factor — higher appreciation builds equity faster, shortening the break-even. Investment return works in the opposite direction: a higher stock market return increases the opportunity cost of the down payment, making renting relatively cheaper. Down payment size affects both: a larger down payment means lower mortgage payments but a higher opportunity cost. Closing costs and mortgage rate also have significant impact. Use the sliders to explore how changing any of these shifts your personal break-even.
Understanding the Results
A negative "net buy cost" in early years does not mean you profited — it means the equity you've built exceeds the out-of-pocket costs you've paid so far. This equity is real wealth, but it's illiquid until you sell. The comparison table shows both sides on an equal footing: buy costs are netted against equity, and rent costs include the foregone investment growth of your down payment. When the break-even year is "never found," it means renting remains cheaper throughout the full 30-year analysis window — common in high-price-to-rent ratio markets.
Frequently Asked Questions
How does the rent vs buy calculator work?
The calculator simulates your cumulative costs over up to 30 years for both renting and buying. For buying, it adds up mortgage payments, property taxes, maintenance, insurance, and closing costs, then subtracts the equity you've built (home value minus remaining loan balance). For renting, it adds cumulative rent paid plus the opportunity cost of the down payment — what that money would have earned if invested instead. The break-even year is when cumulative buy costs first fall below cumulative rent costs.
What is the break-even year?
The break-even year is when owning a home becomes cheaper than renting on a cumulative basis. Before the break-even point, renting is financially advantageous because the upfront costs of buying (closing costs, down payment opportunity cost) haven't yet been offset by equity and price appreciation. After the break-even year, the cumulative cost of buying falls below what you would have spent renting. Typical break-even periods range from 5 to 15 years depending on local market conditions.
What costs are included in the buy calculation?
The buy side includes: closing costs (typically 2–5% of the home price), monthly mortgage principal and interest payments, annual property tax (commonly 1–1.5% of home value), homeowner's insurance, and ongoing maintenance costs (typically 1–2% of home value per year). These total costs are then offset by the equity you accumulate — the difference between your home's current market value and your remaining mortgage balance.
What is opportunity cost and why does it matter?
Opportunity cost is what your down payment could have earned if invested elsewhere instead of used to buy a home. For example, a $60,000 down payment invested at 7% annual return grows to about $115,000 after 10 years — a $55,000 gain. This foregone investment return is added to the renter's cost to make a fair comparison. It's why even a "free" rental has a financial cost: you're giving up the growth that down payment money could generate in the stock market.
Should I rent or buy right now?
The right answer depends on your personal situation beyond just finances. Financially, buying makes more sense when you plan to stay in the home beyond the break-even year, when rent-to-price ratios are favorable, and when mortgage rates are low relative to investment returns. Renting makes more sense for short time horizons, in expensive cities with high price-to-rent ratios, or when you value flexibility. Use this calculator to find your specific break-even year, then weigh it against your plans, job stability, and lifestyle preferences.
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