Rent vs. Buy Calculator
Buying only wins financially after a certain point — this models both paths month by month, including what renting's savings could earn if invested, and finds the exact year buying starts coming out ahead.
If you rent
If you buy
Assumptions
Break-even year
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Enter your details and calculate.
Net worth from buying = home value − remaining loan − selling costs. Net worth from renting = the down payment and closing costs you didn't spend, plus every month's cost difference, all invested at your assumed return.
Why this isn't a simple monthly-payment comparison
Comparing a mortgage payment to a rent check misses almost everything that actually decides the answer. Buying ties up a down payment and closing costs that could otherwise be invested. Owning adds property tax, insurance, and maintenance on top of principal and interest. And renting has no equity to show for any of it — but if renting is cheaper month to month, that leftover cash can be invested instead of vanishing.
This calculator runs both paths side by side, month by month, and compares net worth — not monthly cost — at every point along the way.
How the two paths are modeled
The buying path tracks your loan balance amortizing down and your home value appreciating, month by month. At any point, your net worth from buying is:
The renting path starts by investing whatever you didn't spend on a down payment and closing costs. Then, every month, it compares that month's cost to rent against that month's cost to own — and invests the difference, whichever direction it runs:
The break-even year is simply the first year the buyer's net worth overtakes the renter's. Before it, renting and investing the difference comes out ahead; after it, buying does.
A worked example, step by step
Say you're comparing a $450,000 home (20% down, 6.5% for 30 years) against a comparable $2,200-a-month rental — the same numbers loaded into the calculator above by default.
- Step 1 — first month's cost to buy. Principal and interest come to about $2,275, plus $414 in property tax, $150 in insurance, and $376 in maintenance — about $3,215 a month in total.
- Step 2 — first month's cost to rent. $2,200 a month — about $1,015 less than owning, at least at the start.
- Step 3 — what the renter invests up front. The $90,000 down payment plus $13,500 in closing costs the buyer spent — $103,500 — goes into the renter's investment account instead, assumed to grow at 5% a year.
- Step 4 — year 10. The buyer's net worth (home equity plus appreciation, minus what it'd cost to sell) reaches about $263,000. The renter's invested balance reaches about $301,000 — renting is still about $38,000 ahead.
- Step 5 — year 18. The buyer's net worth reaches about $493,000, just edging past the renter's roughly $490,000 — this is the break-even year.
- Step 6 — year 20. The buyer is now ahead by about $22,000, and the gap keeps widening every year after — the mortgage is fixed while rent keeps climbing, and home equity keeps compounding.
Change the rent, the price, the rates, or how long you're staying, and the calculator above finds the new break-even year instantly.
Frequently asked questions
What counts as the break-even year?
The first year your net worth from buying — home equity plus appreciation, minus what it would cost to sell — overtakes your net worth from renting and investing everything you didn't spend on a down payment, closing costs, and higher monthly ownership costs.
Why does renting ever come out ahead of buying?
Because a down payment and closing costs are a lot of cash left uninvested the moment you buy, and owning usually costs more per month than renting once you add taxes, insurance, and maintenance. If that gap, invested instead, grows faster than your home's equity and appreciation, renting wins — at least until the math flips.
What investment return should I assume for the renting side?
A moderate, diversified long-run assumption — often 4%–6% — is more defensible than assuming all-stock-market returns, since that's an unusually optimistic and volatile benchmark to hold up against a house. Try a range and see how much it moves your break-even year.
Does this account for the mortgage interest tax deduction?
No. Mortgage interest and property tax deductions depend on whether you itemize, which fewer homeowners do since the standard deduction nearly doubled in 2018. This calculator compares pre-tax costs on both sides; if you itemize, buying's real advantage is somewhat better than shown here.
What if I don't know what to use for home appreciation or rent growth?
3% a year is a common, conservative long-run assumption for both — roughly in line with historical averages in most U.S. metros, though your local market may run higher or lower. The break-even year is sensitive to both, so it's worth checking your specific area.
I'm only staying a few years — does buying ever make sense?
Usually not, financially. Closing costs and selling costs alone often take several years of appreciation to recover, which is why the break-even year for most scenarios lands well past the 3-to-5-year mark. If you plan to stay only briefly, renting is very often the stronger financial choice.
Does this include the emotional or lifestyle value of owning?
No — this is a financial comparison only. Stability, the ability to renovate, and not having a landlord are real reasons people choose to buy even when the numbers favor renting, and this calculator can't weigh those for you.