Rent vs Buy Calculator
Should you rent or buy? This calculator compares the true cost of homeownership against renting, factoring in mortgage payments, property taxes, opportunity cost of your down payment, home appreciation, and rent increases.
🏠 Buying
🔑 Renting
Verdict
Cumulative Cost Over Time
Should You Rent or Buy?
The rent vs buy decision is one of the biggest financial choices you'll make. It's not just about comparing monthly payments — you need to account for the full picture: mortgage interest, property taxes, maintenance, home appreciation, the opportunity cost of tying up your down payment, rent increases, and how long you plan to stay.
The True Cost of Buying
Homeownership costs extend far beyond the mortgage payment. The "hidden costs" of buying include:
- Closing costs: 2–5% of the home price upfront (closing fees, inspection, etc.)
- Property taxes: Typically 0.5–2.5% of home value annually
- Maintenance & repairs: Budget 1% of home value per year
- Insurance: $1,000–3,000/year depending on location
- HOA fees: Vary widely, $0–500+/month
- Property transfer taxes & ongoing assessments
However, buying also builds equity — each mortgage payment increases your ownership stake, and the home may appreciate in value. When you sell, you recover some of these costs.
The Opportunity Cost of Renting
When you rent, your down payment stays liquid and can be invested in the stock market. Historically, the S&P 500 has returned about 7% annually after inflation. If your down payment grows at 7% while home prices appreciate at 3%, renting and investing can sometimes win — especially in expensive markets where price-to-rent ratios are high.
What's the Breakeven Point?
The breakeven year is when the net cost of buying becomes cheaper than renting. If you plan to move before the breakeven point, renting is usually better. If you'll stay longer, buying typically wins. Nationally, the average breakeven is 5–7 years, but it varies enormously by market. In high-cost cities (San Francisco, New York), it can take 10+ years; in affordable areas, it might be just 2–3 years.
Key Factors That Shift the Math
- Interest rates: Higher mortgage rates make buying more expensive, pushing the breakeven further out.
- Price-to-rent ratio: If homes cost 20x annual rent, renting is usually better. Below 15x, buying often wins.
- How long you stay: The longer you stay, the more buying makes sense (amortization of upfront costs).
- Market appreciation: Fast-rising markets favor buying; stagnant markets favor renting.
Disclaimer
This calculator provides estimates for informational purposes only. It does not account for tax deductions (mortgage interest, property tax), maintenance costs, closing costs on sale, or local market conditions. Consult a financial advisor for personalized advice.