Rent vs Buy Calculator

What is rent vs buy?

Rent versus buy is a cash-flow comparison with a defined end date. You add up every dollar renting costs over the horizon you expect to stay, add up every dollar owning costs — principal, interest, taxes, insurance, maintenance, and the cost of the cash you put in — subtract whatever equity you get back when you sell, and look for the year where the two lines cross. That year is the break-even. Before it, renting is cheaper. After it, buying is.

The comparison is rarely close in month one. On a $450,000 home bought with $90,000 down at 6.5%, owning costs $3,187.94 a month once taxes, insurance, and maintenance are included, against rent of $2,200 — renting is $987.94 a month cheaper on day one. What changes the answer is time. Rent grows: at 3% a year it reaches $2,476 by year 5 and $2,871 by year 10. The mortgage payment does not change — the same $2,275.44 in year 1 and year 360. Meanwhile the owner converts payments into equity, $23,000 of principal in the first five years here, and captures appreciation on the whole property rather than on the payment.

Against that sit the costs people forget: closing costs of 2% to 5% when you buy, selling costs of 6% to 8% when you leave, and the return you forgo on the down payment — $90,000 invested elsewhere at 4% is $300 a month. This example crosses over in year 5 at 3% annual appreciation, ahead of renting by $7,041; add the opportunity cost of the down payment and the cross moves to year 7. At 0% appreciation renting stays ahead by $59,615 through year 5. Three inputs decide the answer — how long you stay, what homes and rents do in your market, and how much cash you can put to work — which is why the five-year rule of thumb exists: if you cannot commit to five-plus years in the home, rent.

How to use this calculator

1. Enter your monthly rent and the annual rent increase you expect — 3% is a reasonable default for most U.S. markets.
2. Enter the home purchase price, down payment, mortgage rate, and loan term. The worked examples here use $450,000, $90,000 down, 6.5%, and 360 months.
3. Add the ownership costs that are not part of the loan: property taxes, homeowners insurance, HOA dues, and maintenance. Budget tax at roughly 1.1% of value and maintenance at 1% of value a year.
4. Enter the home appreciation rate for your market, and the selling cost you would pay at the end — 6% to 8% of the sale price is realistic.
5. Choose how long you plan to stay, then click Calculate for cumulative costs, the break-even year, and your estimated equity at exit.

A realistic input set: $450,000 purchase price, $90,000 down (20%), $360,000 financed at 6.5% over 30 years, property tax at 1.1% of value, $1,500 a year of homeowners insurance, maintenance at 1% of value, 3% appreciation, 7% selling costs, against rent of $2,200 growing 3% a year. Those inputs produce a $2,275.44 principal-and-interest payment and a $3,187.94 total monthly cost of owning — the gap between those two numbers is the one most comparisons get wrong. Check your tax rate with the property tax calculator and today's pricing on our mortgage rates page.

How it is calculated

The calculator builds both columns from the same three blocks: the loan payment, the carrying costs that sit outside the loan, and the cash you commit up front. The monthly cost of owning is:

Monthly cost = principal and interest + property taxes ÷ 12 + insurance ÷ 12 + maintenance ÷ 12

The rent column is simply rent × 12 each year, escalated by your rent-growth assumption. Break-even is the first year in which cumulative rent paid exceeds cumulative ownership cost after the equity you recover on sale — cash out the door minus what comes back.

Worked example: $450,000 home, $90,000 down, against $2,200 rent

Step 1: the loan is $450,000 − $90,000 = $360,000. Step 2: the monthly rate is 6.5% ÷ 12 = 0.005416667 over n = 360 payments, and (1 + 0.005416667)³⁶⁰ = 6.991798, so principal and interest is 360,000 × 0.005416667 × 6.991798 ÷ 5.991798 = $2,275.44. Step 3: taxes are $450,000 × 1.1% ÷ 12 = $412.50 a month, insurance is $1,500 ÷ 12 = $125.00, and maintenance is $450,000 × 1% ÷ 12 = $375.00, giving a total monthly cost of $3,187.94 against $2,200 of rent. Step 4: the opportunity cost of the down payment is $90,000 × 4% ÷ 12 = $300.00 a month.

Step 5 runs the five-year totals. Cash out is the $90,000 down payment plus 60 monthly payments of $3,187.94, or $281,277. At 3% appreciation the home is worth $450,000 × 1.03⁵ = $521,673, the loan balance is $337,000, so equity is $184,674; selling costs at 7% are $36,517, leaving $148,157 recovered. Net cost of buying is $281,277 − $148,157 = $133,120. Cumulative rent over the same 60 months is $140,161. Buying is ahead by $7,041, and the break-even lands in year 5.

Worked scenarios

Three things move the answer: the monthly cost stack, the horizon you commit to, and what the house does in price. Each table below freezes two of them.

Monthly cost breakdown: $450,000 home versus $2,200 rent

Principal and interest on the $360,000 loan adds $2,275.44 to that table, which is why the total reaches $3,187.94 while the loan payment alone looks close to rent. Carrying costs add $912.50 a month on top of the mortgage — $10,950 a year — and maintenance alone is $4,500. The monthly gap in year 1 is $987.94 in favor of renting.

Cumulative cost by horizon, 3% appreciation, 7% selling costs

Net cost of buying is cash out — down payment plus every monthly payment — minus the equity recovered after selling costs. The three-year row is why the five-year rule exists: closing and selling costs are still larger than the appreciation and principal gained, so a buyer who leaves in year 3 is $12,962 behind the renter. By year 7 the margin is large enough to absorb a modest miss on the timing.

Break-even sensitivity to appreciation, five-year horizon

Appreciation is the single largest lever because it applies to the whole $450,000 asset while the payment stays fixed. This is the assumption to stress-test: at 0% over five years renting wins by $59,615, and at 0% over ten years it still wins by $56,601. Run the calculator at 0%, 2%, and 3% before you commit to a price point.

Key details and rules of thumb

• The five-year rule. Closing costs of 2% to 5% on the way in ($9,000 to $22,500 on $450,000) and selling costs of 6% to 8% on the way out ($27,000 to $36,000) make short stays expensive. Below five years, the transaction costs usually outrun the equity you build.
• The 28% rule. Total housing cost should stay under 28% of gross monthly income. The loan payment plus taxes and insurance here is $2,812.94, which requires $120,555 of annual income; including maintenance, $3,187.94 requires $136,626.
• The price-to-rent ratio. Purchase price divided by annual rent: $450,000 ÷ $26,400 = 17.0. Below 15 favors buying, above 20 favors renting, and 15 to 20 means tenure decides the outcome.
• Opportunity cost of the down payment. $90,000 left invested at 4% returns $3,600 a year, or $300 a month, versus $0 of return while it sits in the house. Counting it moves this example's break-even from year 5 to year 7.
• Fixed versus growing costs. Principal and interest stay at $2,275.44 for all 360 payments; rent at 3% reaches $2,871 by year 10. The counterweight is that property taxes and insurance also rise, so neither column is truly fixed.
• Equity returns slowly at first. Five years of payments on this loan repay $23,000 of principal — year 1 alone pays $23,282 of interest. Early equity comes from down payment and appreciation, not from amortization.
• Break-even is a range, not a date. At 3% appreciation this example breaks even in year 5; counting the down payment's opportunity cost it is year 7; at 0% appreciation renting stays ahead past year 10.

Tips for 2026

• Set your tenure assumption before you shop. Every number downstream depends on it. If your realistic horizon is three years, renting is $12,962 cheaper in this example — no rate, price, or negotiation changes that arithmetic enough to matter.
• Stress-test at 0% appreciation. Run the calculator with your market flat. If the numbers only work at 3% or 4% growth, you are buying a forecast, not a home. At 0% here, renting wins by $59,615 over five years.
• Compare the full cost stack, not the loan payment. Renting at $2,200 against a $2,275.44 mortgage looks like a coin flip; the real comparison is $2,200 against $3,187.94. Taxes, insurance, and maintenance add $912.50 a month that no lender will quote you.
• Count the down payment's opportunity cost. $90,000 at 4% is $300 a month of return you give up. Including it pushes break-even from year 5 to year 7 in this example — a full two years of extra exposure to one market.
• Budget selling costs before you count equity as savings. At 7%, the year-5 sale of a $521,673 home costs $36,517. Buyers who plan around the gross equity figure routinely overstate their position by that amount.
• Qualify on the 28% rule while you still rent. With rent of $2,200, a housing payment of $3,187.94 must fit inside 28% of gross income — $136,626 a year. Test it against your own pay stubs with the affordability calculator before falling for a price point.

Common rent vs buy mistakes

• Comparing rent with principal and interest only. $2,200 of rent versus a $2,275.44 mortgage payment suggests renting and buying cost the same. They do not: the ownership figure is $3,187.94 once $412.50 of tax, $125 of insurance, and $375 of maintenance are counted — a $987.94 monthly gap in year 1.
• Treating appreciation as guaranteed. The base case here assumes 3% a year. At 0%, buying costs $59,615 more than renting over five years and $56,601 more over ten. Choose a price point that survives a flat decade.
• Forgetting selling costs. 6% to 8% of the sale price leaves at the end — $36,517 at 7% on the year-5 value of $521,673. Equity that never reaches your account cannot be counted as a return.
• Ignoring the down payment's alternative use. $90,000 earning 4% is $300 a month and $19,499 over five years. Omitting it makes buying look roughly two years cheaper than it is.
• Skipping maintenance in the budget. 1% of value is $4,500 a year, $375 a month, and it arrives in lumps — roof, HVAC, water heater. A budget built on the mortgage payment alone breaks the first bad year.
• Buying with less than five years of staying power. Job changes, family changes, and divorce move people more often than plans expect. In this example a three-year stay leaves the buyer $12,962 behind the renter, before any move-related stress.

Frequently asked questions

What is the break-even point on this example? Year 5, assuming 3% annual appreciation and 7% selling costs: owning runs $133,120 against $140,161 of rent, a $7,041 advantage. Counting the $300 a month of opportunity cost on the $90,000 down payment moves break-even to year 7, where the advantage is $5,272.

How much cash do I need to buy rather than rent? This purchase needs $90,000 down plus closing costs of 2% to 5% — $9,000 to $22,500 on $450,000 — so $99,000 to $112,500 before move-in. Renting typically needs first month, last month, and a security deposit: about $6,600 at $2,200 a month.

Is renting throwing money away? No. Owning here costs $3,187.94 a month against $2,200 of rent, and of $136,526 paid to the lender over five years only $23,000 becomes principal. The renter who invests the $987.94 monthly difference is not wasting anything — they are simply buying a different asset.

What happens if home prices do not rise? At 0% appreciation this example costs $199,776 to own for five years against $140,161 of rent — renting ahead by $59,615. Even over ten years the renter stays ahead by $56,601, because selling costs and interest outrun flat equity.

How does rent growth change the answer? At 3% a year, rent moves from $2,200 to $2,476 by year 5 and $2,871 by year 10, totaling $302,646 over the decade. Lower growth weakens the buying case and higher growth strengthens it, which is why you should use local data rather than a national average.

Does buying always win over ten years? Not guaranteed. At 3% appreciation buying is ahead by $87,328 at year 10; at 0% appreciation renting is ahead by $56,601. The ten-year horizon improves the odds because more selling cost is spread over more appreciation and principal, but it does not guarantee the outcome.

What is the true cost of the down payment? Beyond the cash itself, $90,000 left invested at 4% would return $3,600 a year — $300 a month, $19,499 over five years. That is the number that moves this example's break-even from year 5 to year 7 and should sit in your comparison table.

Should I buy simply because I can afford it? Affordability is one input; staying power is the other. On $136,626 of required income for this payment at 28%, the loan qualifies — but a move inside five years costs $12,962 against renting in this example, so the decision should be made on tenure first.

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