What is the break-even year in a buy vs rent comparison?

The break-even year is the point at which the cumulative net cost of buying (mortgage payments, taxes, insurance, maintenance minus equity gained) equals the cumulative cost of renting. Before that year renting is cheaper; after it buying is cheaper.

What is the opportunity cost of a down payment?

The down payment is capital you could otherwise invest. The opportunity cost is the return that capital would have earned in an investment portfolio over the same period. This calculator subtracts that foregone return from the buying side to give a fair comparison.

Does this calculator include home price appreciation?

Yes. Home appreciation increases your equity over time, which reduces the net cost of buying. Enter your expected annual appreciation rate — historical US average is roughly 3–4%, though local markets vary widely.

How is equity calculated?

Equity equals the current home value (original price compounded at the appreciation rate) minus the outstanding mortgage balance. The outstanding balance is computed from the standard amortization formula applied to each year in the holding period.

Why does renting sometimes stay cheaper even after 30 years?

If rent is low relative to the home price, home appreciation is modest, or the investment return on the down payment is high, the opportunity cost and carrying costs of ownership can exceed the rent cost for the entire modeled period. The price-to-rent ratio (home price ÷ annual rent) above roughly 20 often favors renting.

Are taxes (mortgage interest deduction, capital gains) included?

No — tax treatment varies by income, filing status, and jurisdiction. The comparison here is pre-tax. Consult a tax adviser to factor in deductions or capital-gains exclusions specific to your situation.

Mortgage vs Rent Calculator

Enter home price, down payment, rent, and holding period to see the total cost of buying versus renting, equity built, and the year buying becomes cheaper.

Calculator Inputs

Buying

Home Price

Down Payment

Mortgage Rate (Annual)

Loan Term (Years)

Property Tax Rate

Insurance (Annual)

Maintenance (% of Home Value/yr)

Home Appreciation (Annual)

Renting

Monthly Rent

Annual Rent Increase

Down Payment Investment Return

Holding Period (Years)

1 yr 10 years 30 yrs

Fill in the inputs on the left and click Compare to see the buy vs rent analysis.

Total Cost of Buying

—

(payments + taxes + fees − equity)

Total Cost of Renting

—

(rent paid − investment gain on DP)

Equity Built

—

Break-Even Year

—

Net Cost by Year

Buying net cost Renting net cost

Year-by-Year Detail

Year	Buy Net Cost	Rent Net Cost	Equity	Advantage

Summary

This calculator compares the true financial cost of buying a home versus continuing to rent over your planned holding period. It accounts for mortgage payments, property taxes, insurance, maintenance, and the equity you accumulate — then weighs that against rent payments and the investment return you could earn on the down payment capital. The result is a year-by-year net cost comparison and a break-even year when buying becomes the cheaper option.

How it works

Enter the home purchase price and your down payment amount or percentage.
Enter the mortgage interest rate and loan term (typically 30 years).
Enter your current monthly rent and an expected annual rent increase.
Fill in annual property tax rate, homeowner insurance, and maintenance estimate.
Enter the expected annual home appreciation rate and the return you could earn investing the down payment.
Set your planned holding period in years, then click Calculate.
Review the year-by-year cost table and the break-even year highlighted in the results.

Use cases

Deciding whether to buy a home now or continue renting for another few years.
Quantifying the break-even year so you know how long you must stay to make buying worth it.
Comparing different down payment sizes to see their effect on the total cost outcome.
Evaluating how home appreciation expectations change the buy-vs-rent decision.
Estimating the opportunity cost of tying up a large down payment versus investing it.
Planning a relocation and assessing whether buying makes sense given a 2–5 year horizon.

Frequently Asked Questions

Last updated: 2026-06-15 · Reviewed by Nham Vu