Rent vs. Buy Calculator
✦ Finance & MoneyUse this free rent-vs-buy calculator to compare your total net cost of renting against owning over any time horizon — with the break-even year, home appreciation, and what your down payment could earn if invested instead.
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- ✓ Formula and sources shown
The formula
Net cost of buying vs renting
NetBuyCost(h) = DownPayment + ClosingCosts + Payments(h) + PropertyTax(h) + Insurance(h) + HOA(h) + Maintenance(h) − [HomeValue(h) × (1 − SellingCost%) − Balance(h)]
NetRentCost(h) = CumulativeRent(h) − (DownPayment + ClosingCosts) × [(1 + InvestReturn)^h − 1]Both sides measure the same thing at each year h: money spent, minus what is still yours. The buyer gets back the equity left after selling costs and the loan payoff. The renter never spends the down payment and closing costs, so they stay invested and earn the investment return — that gain is subtracted from the rent paid. Break-even year = the first h where NetBuyCost ≤ NetRentCost. The renter's monthly saving when rent is below the cost of owning is not invested in the model, which slightly favours buying.
Calculating it by hand
- Enter the home price and your expected down payment percentage.
- Enter the mortgage rate and your current or comparable monthly rent.
- Set the horizon slider to how many years you expect to stay.
- Enter your assumption for annual home appreciation (this is the biggest variable).
- Open "Ownership costs & returns" to review or change property tax, maintenance, closing costs, selling costs, rent increase, and the return the down payment would earn if invested instead.
- Read the break-even year: before that year renting is cheaper; after it buying is cheaper under your assumptions. "Not within N years" means renting stays cheaper for your whole horizon.
- Toggle "Mortgage interest deduction" on only if you itemize; it is off by default because most households use the standard deduction (IRS Pub. 936).
Worked examples
$450,000 home, 20% down, 7% rate, $2,200 rent, 10-year stay
Loan = $450,000 × 80% = $360,000; monthly P&I at 7% for 30 years = $2,395.09.Year 10, buying: $90,000 down + $13,500 closing + $287,411 of payments + $49,500 tax + $18,000 insurance + $45,000 maintenance = $503,411 spent; home worth $450,000 × 1.03^10 = $604,762, less 6% selling costs and the $308,925 balance leaves $259,552 of equity. Net cost $243,859.Year 10, renting: rent rising 3% a year totals $302,646. The $103,500 a buyer would have spent stays invested: × (1.07^10 − 1) = $100,100 gain. Net cost $302,646 − $100,100 = $202,546.Renting is $41,313 cheaper at year 10, and cheaper in every year from 1 to 10.
Break-even: not within 10 years — renting costs $202,546 net against $243,859 for buying.
Same home, stay up to 30 years: when does buying win?
Same inputs, horizon 30 years. Each year the buyer's net cost grows more slowly as principal is repaid and the home appreciates; the renter's rent rises 3% a year but the investment gain grows faster still at first.Year 15: buying $310,814 net, renting $308,952 — renting still slightly ahead.Year 16: buying $320,616 net, renting $532,142 rent − $202,049 gain = $330,093 — buying is now cheaper.Year 30: buying $276,500 net (equity $1,026,732), renting $571,623.
Break-even in year 16; by year 30 buying is $295,123 cheaper under these assumptions.
Zero appreciation: does buying ever win?
$450,000 home, 20% down, 7% rate, 0% appreciation, $2,200 rent, 3% rent increase, 7% investment return, 30-year horizon.With no appreciation the home sells for $450,000; 6% selling costs ($27,000) come straight off the equity, which grows only through principal repayment.Year 10: buying $389,335 net against renting $202,546. Year 30: buying $880,232 against renting $571,623.The renter's investment gain keeps renting ahead in every year.
With 0% appreciation and a 7% investment return, buying never breaks even within 30 years — the break-even reads "Not within 30 years".
Methodology
Why the break-even year changes everything
Most people compare the monthly mortgage payment to their rent — but the real question is how long you plan to stay, because closing and selling costs mean buying is almost always more expensive in the first few years.
Read sources and limitsWhat costs do most rent-vs-buy comparisons miss?
A mortgage payment covers only principal and interest. Owning also costs property tax (typically 0.5–2.5% of value a year), homeowners insurance, HOA fees and maintenance — the 1% rule budgets 1% of the home's value a year for repairs. Together these often put the real carrying cost 30–50% above the headline payment.
The renter's side has a figure that never appears on a bank statement: the down payment and closing costs the renter did not spend. Invested at 7%, the default $90,000 down payment and $13,500 of closing costs grow to $203,600 in ten years — a $100,100 gain that belongs to the renter. The calculator subtracts it from the rent paid, which is why renting can stay cheaper for years even when rent and the mortgage payment look similar.
How is the rent-vs-buy break-even year calculated?
For every year of the horizon the calculator totals what each path has cost. Buyer: down payment, closing costs, mortgage payments, tax, insurance, HOA and maintenance, minus the equity left after selling costs and the loan payoff. Renter: rent paid, minus the investment gain on the cash a buyer would have spent.
The break-even year is the first year in which the buying total drops below the renting total. At the defaults — $450,000, 20% down, 7%, $2,200 rent, 3% appreciation, 7% return — buying costs $243,859 net at year 10 against $202,546 for renting, so buying has not broken even within 10 years; stretch the horizon to 30 and it does in year 16.
Staying fewer years than the break-even costs you money compared with renting and investing. The year-by-year table shows both totals, the rent paid and the renter's investment gain, so you can see exactly which year tips the balance and by how much.
Which assumptions move the break-even year most?
Home appreciation and the investment return do most of the work. On the default home over a 30-year horizon, 3% appreciation breaks even in year 16; 4% brings it to year 9 and 5% to year 6; at 2% it takes until year 28, and at 1% or 0% buying never catches up. The investment return pulls the other way.
With 3% appreciation, a 5% return on the invested down payment moves break-even to year 11 and a 4% return to year 10; at 10% renting stays cheaper for all 30 years. Neither input is a forecast. The FHFA House Price Index shows US home prices rising about 4–5% a year over three decades, with wide regional spread and two crashes; long-run stock returns of about 7% after inflation guarantee no particular decade.
The useful response to that uncertainty is to run the comparison at several values and look at the range rather than trusting one number. If buying only wins at 5% appreciation, that assumption is doing a lot of work.
Should you count the mortgage interest deduction?
Usually not. The Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction, so for most households itemizing — which the mortgage interest deduction requires — is no longer worth it. IRS Statistics of Income data show about nine in ten returns now take the standard deduction, and for them the deduction is worth nothing.
For those who do itemize, the benefit is only the amount by which itemized deductions exceed the standard deduction, not the whole interest bill. The toggle uses a simple approximation (interest × your marginal rate) that overstates the benefit for most filers. If you itemize, use IRS Publication 936 or a tax professional for the real figure.
What does this rent vs buy calculator leave out?
Several things are excluded because they are individual or need data the calculator cannot know: PMI below 20% down, property-tax reassessment as the home appreciates, HOA special assessments, the capital-gains exclusion on sale (up to $250,000 / $500,000 under IRC §121), and rental income from part of the home.
The model also does not invest the renter's monthly saving in the years when rent is below the cost of owning; including it would make renting look somewhat better still. And it cannot price stability or flexibility. The break-even year is a financial estimate under your assumptions, not a life decision.
Rent vs. Buy questions
Should I rent or buy a house right now?
This calculator cannot answer that — it shows the financial comparison under your assumptions. "Right now" matters because mortgage rates, local prices and rents all move. Run it with your actual numbers: if the break-even year is later than you plan to stay, renting and investing is likely cheaper. Job stability, family plans and local market conditions belong in the decision too and are outside this tool's scope.
What is the break-even year in rent vs buy?
It is the first year in which the total net cost of buying — every payment, tax, insurance, maintenance, closing and selling cost, minus the equity you keep — falls below the net cost of renting, which is the rent paid minus what the down payment and closing costs earned invested. Before that year renting is cheaper; after it buying is. At the calculator's defaults it is year 16 over a 30-year horizon, so a 10-year stay does not reach it.
How does the down payment's investment return enter the comparison?
A renter keeps the cash a buyer would spend up front. At the defaults that is a $90,000 down payment plus $13,500 of closing costs; invested at 7% it grows to $203,600 in ten years — a $100,100 gain. That gain belongs to the renter, so the calculator subtracts it from the rent paid. It is the same money a buyer gives up by buying (the opportunity cost). A higher assumed return makes renting look better; a lower one makes buying look better.
Why is the mortgage interest deduction turned off by default?
Since the Tax Cuts and Jobs Act of 2017 roughly doubled the standard deduction, most US households no longer benefit from itemizing; IRS Statistics of Income data show about nine in ten returns take the standard deduction, so the mortgage interest deduction is worth $0 to them. Enable the toggle only if you itemize — and even then the calculator uses a simplified approximation. IRS Publication 936 has the actual rules.
How much home appreciation should I assume?
The FHFA House Price Index shows US home prices rising about 4–5% a year over three decades, with large regional differences and two crashes. Some metros averaged 6–8%, others 1–2%. The default 3% is conservative. Run the comparison at 2%, 3% and 5%: on the default home that moves the 30-year break-even from year 28 to year 16 to year 6. If buying only makes sense at 5% or more, that assumption is carrying the result.
Does this calculator include PMI?
No. Private mortgage insurance applies when the down payment is below 20% and typically costs about 0.5–1.5% of the loan a year. The calculation uses your down payment percentage but has no PMI line, so with less than 20% down the cost of buying is understated until PMI ends (at 78–80% LTV under the Homeowners Protection Act). Add an estimate to the insurance field as a manual adjustment.
Is rent vs buy just about the money?
No. Buying provides stability and the freedom to change the home; renting provides flexibility to move. Stability matters with school-age children or a settled job; flexibility matters when career or family plans are uncertain. The break-even year is a financial guide, not a life decision. Many people buy a home that is "financially worse" than renting because the non-financial benefits are worth it to them — a legitimate choice when it is made with accurate numbers.
Why do closing and selling costs matter so much?
Buying and selling typically cost 8–11% of the price in total (2–5% closing costs to buy, 5–8% to sell). On a $450,000 home that is $36,000–$49,500 before a single mortgage payment, and it is recovered only through appreciation and principal repayment. That is why a short stay almost always makes renting cheaper: at the defaults, buying costs $109,467 net after 3 years against $58,308 for renting.
Why can the net cost of buying be negative?
When appreciation is strong and you stay long, the equity you walk away with can exceed everything you paid in. On the default home with 4% appreciation over 30 years, the net cost of buying is −$68,725: you end up with more than you spent. A negative net rent cost can happen too, when the investment gain on the down payment outgrows the rent. Both mean that path left you better off than it cost.
Source notes
Method, sources & limitations
Every figure on this page comes from the formula above applied to the values you enter. Nothing is estimated from market data, and no result is a forecast. These are the sources behind the method and any fixed figures it uses:
- CFPB — "Owning a Home" (closing costs, mortgage basics)
- CFPB — "What are typical closing costs for a home loan?"
- IRS Publication 936 — Home Mortgage Interest Deduction
- IRS Statistics of Income — Individual income tax returns (standard vs itemized deductions)
- FHFA House Price Index — historical US home price data
- 26 U.S.C. §121 — Exclusion of gain from sale of principal residence
Educational information only. Results are estimates produced from the assumptions you enter, and are not financial, tax, legal or medical advice. Check anything that matters against a qualified professional and the cited sources.