Rent or Buy Calculator
This calculator finds the true all-in cost of buying versus renting a home over the number of years you plan to stay, then tells you which option saves more money and by how much. It goes beyond the mortgage payment to include down payment opportunity cost, home appreciation, equity build-up, closing costs on both sides, property taxes, maintenance, insurance, and the tax deduction on mortgage interest. Adjust the holding period, investment return rate, and appreciation rate to model your own scenario.
How this rent vs buy calculator works
This calculator models the true financial cost of each path over your planned holding period. For buying, it adds up every dollar that leaves your pocket: down payment, closing costs, monthly mortgage (principal and interest), property taxes, homeowner's insurance, maintenance, HOA fees, and private mortgage insurance if your down payment is under 20%. It then subtracts the equity you recover when you sell, which is the appreciated home value minus the remaining loan balance and selling costs. If you choose to itemize, the mortgage interest deduction is applied as a tax saving. For renting, it adds up every month of rent (growing at your input rate), renter's insurance, and subtracts the returns you earn by investing the money that would have gone to a down payment and closing costs. The difference between the two net totals tells you which path costs less over your horizon.
Why the breakeven year matters most
The breakeven year is the single most important output. Buying has high upfront costs (down payment plus closing costs) and ongoing carrying costs (property taxes, maintenance) that renting does not. Over time, equity build-up and home appreciation tip the balance. The breakeven is the year those advantages overtake the head start renting has. If you are confident you will stay past the breakeven year, buying is almost always the better financial choice. If you might move sooner, renting is typically cheaper because you will not have had time to recover the upfront buying costs. A national study found the average US breakeven horizon is around 4 to 7 years, but it varies enormously by city, home price, local rent levels, and whether prices are rising or flat.
Opportunity cost: the hidden cost of the down payment
One of the most overlooked factors in the rent vs buy decision is what economists call opportunity cost. When you put $80,000 into a down payment, that money cannot be earning returns in a stock index fund or other investment. If a diversified portfolio earns 7% per year, that $80,000 grows to about $157,000 over 10 years. This growth is the true cost of tying up capital in a home, and it is what a renter retains. The calculator models this directly: it assumes the renter invests the amount that would have been the down payment and closing costs, and grows it at your chosen investment return rate. This makes the comparison fair: both paths start with the same cash.
Beyond the numbers: non-financial factors to weigh
No calculator captures everything. Buying can provide stability (no landlord eviction risk), the freedom to remodel, potential rental income from spare rooms, and an inflation hedge as rents rise but your mortgage payment stays fixed. Renting offers flexibility to relocate for jobs or lifestyle changes, no maintenance burden, and no exposure to falling home prices. In most markets over most long time horizons, buying has outperformed renting financially, but the margin shrinks considerably in high-price cities where price-to-rent ratios are very high. Run the calculator for your city, your income tax situation, and your honest best guess at how long you will stay.
Typical rent vs buy cost components
| Cost item | Typical range | Notes |
|---|---|---|
| Down payment | 3 - 20% | Under 20% usually triggers PMI |
| Buying closing costs | 2 - 5% | Lender fees, title, appraisal, taxes |
| Property tax rate | 0.3 - 2.5%/yr | US average ~1.1%; varies widely by state |
| HOA fees | $0 - $600/mo | Higher in condos and planned communities |
| Maintenance | 0.5 - 2%/yr | The "1% rule" is a common starting estimate |
| PMI | 0.3 - 1.5%/yr | Dropped automatically at 80% LTV in most loans |
| Selling costs | 5 - 8% | Includes agent commission and transfer taxes |
| Home appreciation | 2 - 5%/yr | US long-run average roughly 3-4%/yr |
| Rent increase | 2 - 5%/yr | Varies by market; national average ~3% |
Common percentage-based benchmarks used in rent vs buy analysis.
Frequently asked questions
How long do you need to stay for buying to make sense?
It depends on your local market, but the US average is roughly 4 to 7 years. High-price cities like San Francisco or New York, where the price-to-rent ratio is very high, can have breakeven points beyond 10 years. Lower-cost metros can break even in 2 to 3 years. The breakeven output in this calculator gives you the specific answer for your inputs.
What is included in the total buying cost?
The total buying cost includes the down payment, buying closing costs, all monthly mortgage payments (principal and interest), property taxes, homeowner's insurance, maintenance and repairs, HOA fees if any, and PMI if your down payment is under 20%. It then subtracts the equity you recover at sale (appreciated home value minus remaining loan balance minus selling costs) and any mortgage interest tax deductions if you itemize.
What is included in the total renting cost?
The total renting cost sums all monthly rent payments (growing at your rent increase rate) plus renter's insurance, then subtracts the investment returns earned on the money you would have spent on a down payment and closing costs. The security deposit is treated as cost-free because it is returned at the end of the lease.
Why does the investment return rate matter so much?
The investment return rate governs the opportunity cost of your down payment. If you assume a high return (say, 10%), keeping money invested rather than locking it in a home becomes very attractive, which favors renting. If you assume a low return (say, 3%), home equity competes favorably. The historical real return on a diversified US stock index is roughly 6 to 7% per year after inflation, which is a common baseline to use.
Does this calculator account for home price appreciation?
Yes. The home appreciation rate input is applied to the purchase price each year. A higher appreciation rate increases the equity you recover at sale, which reduces the net cost of buying. The US long-run nominal appreciation average is roughly 3 to 4% per year, though local markets can differ significantly.
What is PMI and when does it apply?
Private mortgage insurance (PMI) is charged by lenders when your down payment is under 20% of the purchase price. It typically costs 0.3 to 1.5% of the outstanding loan balance per year. Most conventional loans automatically cancel PMI once you reach 20% equity (80% loan-to-value ratio). This calculator models PMI month by month and removes it when your loan balance drops below 80% of the current home value.
Should I include the mortgage interest tax deduction?
Only if you actually itemize your deductions. Since the 2017 tax reform, the US standard deduction is high enough ($14,600 single / $29,200 married in 2024) that most homeowners no longer benefit from itemizing. If your total itemized deductions (mortgage interest, property tax capped at $10,000 SALT, charitable giving, etc.) exceed the standard deduction, toggle itemizing on and enter your marginal rate to see the benefit.