What costs does the buying scenario include?

The buying total includes: mortgage principal and interest, property taxes, homeowner's insurance, maintenance and repairs (typically 1% of home value per year), closing costs on purchase and sale, and the opportunity cost of the down payment. Equity built through principal paydown and home appreciation is subtracted, giving a net cost.

What costs does the renting scenario include?

The renting total includes all rent payments over the period (growing at the annual rent increase rate). The down payment and closing cost savings are assumed to be invested at the expected investment return rate, and the investment gains are subtracted from renting costs to show the true net cost of renting.

What is the break-even year?

The break-even year is the point at which the cumulative cost of buying equals the cumulative cost of renting. Before that year, renting is cheaper; after it, buying is cheaper. It typically ranges from 3 to 10 years depending on local housing costs and mortgage rates.

Why does the calculator ask for an investment return rate?

When you rent instead of buying, the money you would have used for a down payment stays liquid and can be invested. The investment return rate (e.g., 7% for a diversified stock portfolio) represents how much that capital could grow — this is the opportunity cost of tying money up in a down payment.

Does this account for the mortgage interest tax deduction?

No. Because the 2017 Tax Cuts and Jobs Act raised the standard deduction significantly, most homeowners — especially in the early years — no longer itemize. For simplicity, this calculator does not model the deduction. If you itemize, your buying costs will be somewhat lower than shown.

Rent vs. Buy Calculator

Name: Rent vs. Buy Calculator
Availability: InStock
Author: Nham Vu

Enter your home price, rent, and financial details to see whether renting or buying saves you more money over your chosen time horizon.

Your Numbers

Home Purchase Price

Down Payment

= $80,000

Mortgage Interest Rate

Monthly Rent (current)

Time Horizon

yrs

Fill in your numbers and click Calculate to see the comparison.

Net Cost to Buy

—

over — years

Net Cost to Rent

—

over — years

Break-even year: —

Buying Cost Breakdown

Mortgage Payments (P+I)	—
Property Tax	—
Maintenance & Repairs	—
Insurance (~0.5%/yr)	—
HOA Fees	—
Closing Costs (buy + sell)	—
Equity Gained (principal + appreciation)	—
Net Cost of Buying	—

Renting Cost Breakdown

Total Rent Paid	—
Investment Gains (on down payment)	—
Net Cost of Renting	—

Assumptions: 30-year fixed mortgage, 3% buyer closing costs + 6% seller closing costs at end, homeowner insurance 0.5%/yr of home value. Does not include mortgage interest tax deduction.

Summary

Enter your home price, rent, and financial details to see whether renting or buying saves you more money over your chosen time horizon.

How it works

Enter the home purchase price, down payment, and mortgage interest rate.
Enter your current monthly rent and expected annual rent increase.
Set how long you plan to stay (time horizon in years).
Adjust advanced inputs like property tax rate, maintenance cost, and investment return on savings.
The calculator computes total cost of buying vs. renting and highlights which option saves more money over your horizon.

Use cases

Deciding whether to buy a home or continue renting in a high-price market.
Estimating the break-even year when buying becomes cheaper than renting.
Comparing how different down payment amounts affect the rent vs. buy decision.
Planning a relocation and evaluating whether a short stay justifies purchasing.
Understanding how home appreciation and stock market returns shift the calculus.
Stress-testing your home purchase plan against rising mortgage rates.

Frequently Asked Questions

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Last updated: 2026-05-23 · Reviewed by Nham Vu