Rent vs Buy Calculator

Start on the left side with your current monthly rent. Use what you actually pay today, not what you hope to pay. Then set the annual rent increase — 3% is the national average, but fast-growing cities like Austin, Nashville, and Boise have seen 5–8% increases in recent years. Check your lease renewal history if you're unsure.

On the buying side, enter the purchase priceof the home you're considering and your available down payment. The calculator uses your down payment amount to determine the loan size and whether you'll need PMI (factored into the buy-side costs automatically through higher monthly outflows). Fill in property tax rate, insurance, and HOA based on the specific home or neighborhood you're considering.

The maintenance rate (default 1% of home value annually) covers repairs, replacements, and upkeep that landlords handle when you rent. New construction might run 0.5%, while older homes can hit 2%+. The home appreciation rateis how much the property gains in value each year — the long-run national average is about 3.5%, but this varies enormously by market.

The investment returnfield captures what your down payment could earn if you kept renting and invested that cash instead. The S&P 500 has averaged roughly 10% before inflation over the past 50 years, but 7% is a more conservative after-inflation estimate. This opportunity cost is often the single biggest factor in the rent-vs-buy decision.

The break-even year is when buying becomes cheaper than renting on a net-cost basis. “Net cost” means total money spent minus wealth accumulated. For renters, that wealth is the investment gains on the down payment they didn't spend. For buyers, it's the home equity they've built through principal payments and price appreciation.

In the early years, buying almost always costs more. You're paying closing costs, interest-heavy mortgage payments, property taxes, insurance, and maintenance. Renters avoid all of that and their down-payment investment compounds. But over time, three forces shift the balance: rent keeps climbing (typically 3–5% per year), your mortgage payment stays fixed, and your home gains value.

The typical break-even in most U.S. markets falls between years 4 and 8. If you plan to move within 3 years, renting is almost always cheaper once you factor in the 5–6% transaction cost of selling a home (agent commissions, transfer taxes, closing costs). If you're staying 7+ years, buying wins in the vast majority of scenarios. The 4-to-7-year window is the gray zone where your specific numbers matter most — which is exactly what this calculator is designed to clarify.

Keep in mind that a shorter break-even doesn't always mean buying is the right choice. If you need geographic flexibility for career opportunities, or if the local market looks overheated, the financial edge of buying may not outweigh the optionality of renting. The calculator gives you the math; the final decision involves your life plans too.

Renting looks simple — pay rent, pay renter's insurance, done. But the hidden cost is escalation. A $1,800 rent at 3% annual increases becomes $2,425 by year 10 and $4,365 by year 30. Over 30 years, that $1,800 apartment costs a cumulative $1.02 million in rent alone. Most renters don't think that far ahead because they don't plan to rent forever, but the compounding is real whether you plan for it or not.

Buying has its own hidden costs that go beyond the mortgage payment. Maintenanceaverages 1–2% of home value annually — that's $3,500–$7,000 per year on a $350,000 home. A new roof runs $8,000–$15,000. An HVAC replacement is $5,000–$10,000. These costs don't show up in your mortgage payment, but they're unavoidable over a 15-to-30-year ownership period.

Transaction costsare another blind spot. Buying a home costs 2–5% in closing costs. Selling costs 7–10% when you add agent commissions, staging, repairs, and transfer taxes. On a $350,000 home, selling costs alone can run $25,000–$35,000. These costs are baked into the calculator's break-even analysis but they're worth keeping in mind separately: if you sell before break-even, you may take a net loss compared to renting.

The largest hidden cost on the renting side is opportunity cost of the down payment. If you had invested $70,000 at 7% annual returns instead of putting it toward a house, it would grow to roughly $137,000 after 10 years and $533,000 after 30 years. This calculator accounts for that, which is why the break-even point is later than many simple rent-vs-buy comparisons suggest.

Renting gets a bad reputation as “throwing money away,” but that framing ignores the math. In several common scenarios, renting is the smarter financial move — sometimes by a wide margin.

Short time horizons.If you're likely to move within 3–5 years for career, family, or lifestyle reasons, buying rarely pencils out. The transaction costs of selling eat into whatever equity you've built, and in a flat or declining market you could actually lose money. The calculator's break-even year tells you exactly where your threshold sits.

Overheated markets.When the price-to-rent ratio in a city exceeds 20 (annual rent × 20 < purchase price), buying is generally overpriced relative to renting. Markets like San Francisco, New York, and Seattle have historically had ratios above 25, making renting the better deal for all but the longest holding periods.

Disciplined investors.The rent-vs-buy comparison assumes you actually invest the difference if you rent. If you would invest your down payment in a diversified portfolio and consistently save the monthly cost difference, renting can build more wealth than homeownership over long periods. The catch: most people don't actually do this. Homeownership works as a “forced savings plan” that builds equity automatically, which is why it remains the primary wealth-building vehicle for most American households.

Want to explore how much home you could afford if you do decide to buy? Try our home affordability calculator or read the first-time buyer guide.