Rent vs Buy Calculator guide
Compare buying a home with renting and investing the difference. Every assumption is visible, and the table shows who is ahead each year for 30 years.
How this rent vs buy comparison works
Comparing a mortgage payment with rent is the wrong question. The right one: after N years, who has more net worth, the buyer or a renter who invests the money the buyer tied up in the house?
This calculator simulates both paths month by month for 30 years. The buyer pays the down payment and closing costs, then principal and interest, property tax, insurance, maintenance, and HOA every month. The home appreciates. At each year-end the buyer's net worth is what they would walk away with if they sold: home value minus selling costs minus the remaining loan.
The renter starts by investing the exact cash the buyer spent up front. Every month, whoever has the lower housing cost invests the difference at your expected return. Early on that is almost always the renter; once rent has risen for years and the mortgage payment has not, it flips to the buyer. The break-even year is the first year the buyer's net worth passes the renter's.
Worked example: $400,000 home vs $2,200 rent
Buy: 20 percent down ($80,000) plus 3 percent closing ($12,000) is $92,000 up front. The $320,000 loan at 6.5 percent costs $2,022.62 a month. Add 1.1 percent property tax, 1 percent maintenance, and $1,800 insurance and the first month costs $2,872.62. Rent: $2,200 plus $20 of renters insurance, rising 3 percent a year.
The renter invests the $92,000 plus about $650 a month at 6 percent. The home appreciates 3 percent a year, and selling costs 6 percent.
Result: renting is ahead for the first 12 years. At year 10 the renter is $10,303 ahead. Break-even is year 13. By year 15 the buyer is $19,746 ahead, and at year 30, with the mortgage paid off, $256,491 ahead.
Now watch how sensitive this is. Appreciation of 4 percent instead of 3 moves break-even to year 7. Appreciation of 2 percent pushes it to year 22. If the renter earns 8 percent instead of 6, buying never catches up within 30 years. Rent of $2,600 instead of $2,200 makes buying win by year 5. A 5.5 percent mortgage rate: year 7. No single answer is right for everyone; the answer depends on your time horizon and three or four assumptions you should stress-test.
The assumptions that matter most
How long you stay. Buying and selling costs about 8 to 10 percent of the price in round-trip costs. Stay three years and appreciation rarely covers that. Most comparisons flip somewhere between 5 and 12 years.
Home appreciation. US home prices have averaged roughly 4 to 5 percent a year over long periods, but with long flat stretches and big local differences. Use 3 percent as a conservative baseline and test 2 and 4.
Investment return. The renter only wins if they actually invest the difference. A broad stock index has returned about 10 percent nominal historically; 6 percent is a cautious, after-fee assumption. If the money would sit in checking, set the return to 0 and buying wins much sooner.
Maintenance. The 1 percent rule is a floor for older homes. A new roof, HVAC, or water heater lands every few years, and renters never pay for it.
What this calculator leaves out, on purpose
Income taxes. Since the 2017 tax law roughly doubled the standard deduction, most buyers no longer itemize, so the mortgage interest deduction is worth little or nothing to them. Home sale gains up to $250,000 single or $500,000 married are usually tax-free, while the renter's investment gains are taxed; on long horizons that tilts things slightly toward buying.
PMI. With less than 20 percent down on a conventional loan, add roughly 0.3 to 1.5 percent of the loan per year to the costs until you reach 20 percent equity.
Lifestyle. Renting buys flexibility and zero repair risk. Owning buys control and a fixed payment. Those are real, but they do not show up in a spreadsheet.
Common mistakes
Comparing rent with the mortgage payment alone. Taxes, insurance, and maintenance add 30 to 50 percent to principal and interest.
Treating principal as savings but ignoring the down payment's lost return. $92,000 at 6 percent is about $5,500 a year of growth you give up.
Forgetting selling costs. Agent commissions, transfer taxes, and concessions are real money you only pay once, at the end.
How we calculate: sources
Frequently asked questions
How does a rent vs buy calculator work?
It compares two paths. The buyer pays the down payment, closing costs, mortgage, taxes, insurance, and maintenance and builds home equity. The renter invests the same upfront cash plus any monthly savings. The winner is whoever has more net worth after selling costs.
How long do I need to stay for buying to be worth it?
Commonly 5 to 12 years. It depends on the price-to-rent ratio, appreciation, your mortgage rate, and what the renter's investments earn. The break-even year above answers it for your numbers.
Is renting throwing money away?
No. Owners also pay costs they never get back: interest, property tax, insurance, maintenance, and selling costs. Renting can come out ahead, especially over short time frames.
What home appreciation rate should I use?
Three percent is a conservative long-run baseline for many US markets. Test 2 and 4 percent too, because the result is very sensitive to it.
Does this include the mortgage interest tax deduction?
No. Since the standard deduction roughly doubled in 2018, most buyers do not itemize, so the deduction adds little. Home sale gains are often tax-free up to $250,000 single or $500,000 married.
What investment return should I assume for the renter?
Use what you would really earn. Six percent is a cautious long-term stock and bond assumption. If the money would sit in a checking account, use 0 to 1 percent.
Are my numbers saved or uploaded?
Everything runs in your browser. Nothing you enter is uploaded to a server or stored by us.
How many years do I need to stay for buying to beat renting?
Commonly 5 to 12 years, depending on price-to-rent ratio, appreciation, mortgage rate, and what the renter earns on invested savings. Enter your numbers and read the break-even year.