Rent vs Buy Calculator
Free rent vs buy calculator. Compare total costs over time, including appreciation, taxes, maintenance, and opportunity cost of down payment.
Home Purchase Details
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yrs
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$
/yr
%/yr
$
/mo
Rental Details
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%
$
/yr
%
%/yr
yrs
$60,685
Renting and investing builds $323,652 vs $262,967 in home equity
$2,954
Mortgage (P&I)$2,129
Property Tax$367
Insurance$125
Maintenance$333
$2,017
Rent$2,000
Renter's Insurance$17
Monthly Savings$937
$80,000
$537,567
Never
$210,076
Year-by-Year Comparison
| Year | Home Value | Equity | Invested (Rent) | Better Option |
|---|---|---|---|---|
| 1 | $412,000 | $95,251 | $97,635 | Renting |
| 2 | $424,360 | $111,096 | $116,504 | Renting |
| 3 | $437,091 | $127,565 | $136,695 | Renting |
| 4 | $450,204 | $144,685 | $158,298 | Renting |
| 5 | $463,710 | $162,489 | $181,414 | Renting |
| 6 | $477,621 | $181,008 | $206,148 | Renting |
| 7 | $491,950 | $200,278 | $232,613 | Renting |
| 8 | $506,708 | $220,335 | $260,931 | Renting |
| 9 | $521,909 | $241,217 | $291,231 | Renting |
| 10 | $537,567 | $262,967 | $323,652 | Renting |
Important Considerations
Not included: Closing costs (~2-5% buy), selling costs (~6-10%), tax benefits, opportunity cost.
Buying advantages: Forced savings, inflation hedge, stability, potential tax deductions.
Renting advantages: Flexibility, no maintenance, lower upfront costs, easier to relocate.
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Last updated: January 2026
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Frequently Asked Questions
When is it better to rent vs buy a home?
The decision depends on how long you'll stay. Generally, buying makes sense if you'll stay 5+ years—this allows time to recoup closing costs and build equity. Renting is better for shorter stays, uncertain job situations, or when home prices are very high relative to rents. Use the price-to-rent ratio: divide home price by annual rent. Under 15 favors buying, over 20 favors renting, 15-20 is neutral.
What is the 5-year rule in real estate?
The 5-year rule suggests you should plan to stay at least 5 years if buying a home. This accounts for closing costs (2-5% when buying), selling costs (6-10% including agent commissions), and time needed for appreciation to offset these expenses. Breaking even typically takes 3-7 years depending on your market. If you might move sooner, renting often costs less overall.
How does home appreciation affect rent vs buy decisions?
Home appreciation significantly impacts the calculation. At 3% annual appreciation, a $400,000 home gains ~$50,000 in 4 years. However, don't assume high appreciation—the historical average is 3-4% nationally. Hot markets can see 10%+ but also corrections. Compare this to what your down payment could earn invested in index funds (historically 7-10% annually). A larger down payment means more opportunity cost.
What hidden costs of homeownership should I consider?
Beyond mortgage payments, budget for: property taxes (0.5-2.5% of home value annually), homeowner's insurance ($1,000-3,000/year), maintenance and repairs (1-2% of home value yearly), HOA fees ($200-500/month in some communities), utilities (often higher than rentals), and major system replacements (roof: $10,000+, HVAC: $5,000+). These can add 30-50% to your base mortgage payment.
How do I calculate the break-even point for buying?
The break-even point is when buying's total cost equals renting's. Calculate: (Closing costs + selling costs) ÷ (Monthly rent - monthly ownership cost - equity building). If buying costs $2,500/month, rent is $2,000/month, and you build $800/month equity, and total transaction costs are $40,000: $40,000 ÷ ($800 - $500) = ~133 months or 11 years. Appreciation shortens this; market declines extend it.