What costs does the buying side include?

The buying side includes: monthly mortgage principal and interest, property taxes, homeowner's insurance, PMI (if down payment is under 20%), and annual maintenance (typically 1% of home value). Closing costs on purchase are added to the up-front cost. Equity buildup and home appreciation reduce the net cost over time.

What is opportunity cost and why does it matter?

Opportunity cost represents what your down payment could earn if invested instead. If you put $60,000 down on a house, that money can no longer compound in the stock market. The calculator uses your expected annual investment return to calculate foregone gains each year — this is a real cost of buying that is often overlooked.

What is the break-even year?

The break-even year is when the cumulative net cost of buying falls below the cumulative cost of renting. Before that year, renting is cheaper on a total-cost basis; after it, buying becomes the financially superior choice (assuming your inputs hold).

Does this include the tax deduction for mortgage interest?

No. The mortgage interest deduction only applies if you itemize federal deductions, and the 2017 tax reform made that less common. Excluding the deduction gives a conservative, straightforward comparison. If you itemize, your buying costs will be slightly lower than shown.

What appreciation rate should I use?

The long-run US average is roughly 3–4% per year (close to inflation). Hot markets may run 5–7%; stagnant or declining markets may be 0–2%. Use a conservative rate for planning — if appreciation is the only thing making buying look better, that is a risk signal.

Why compare over 5 years specifically?

Five years is a common planning horizon and captures the early period when closing costs and low principal paydown make buying expensive. The year-by-year table lets you model any timeframe by reading the cumulative costs at the year you plan to sell or move.

Rent vs Buy Real Estate Calculator

Name: Rent vs Buy Real Estate Calculator
Availability: InStock
Author: Nham Vu

Compare the true 5-year cost of renting versus buying a home to find your financial break-even point.

Buying Inputs

Home Price ($)

Down Payment ($)

Mortgage Rate (% / year)

Loan Term (years)

Annual Property Tax Rate (%)

Annual Homeowner Insurance ($)

Annual Maintenance (% of home value)

Buying Closing Costs (% of price)

Annual Home Appreciation (%)

Renting Inputs

Monthly Rent ($)

Annual Rent Increase (%)

Annual Renter's Insurance ($)

Investment Return

Expected Investment Return (% / year) — opportunity cost of down payment

Monthly Mortgage Payment

principal + interest

Down Payment (+ Closing)

cash needed at signing

Enter values and click Compare Costs

5-Year Total Cost Comparison

Total Cost of Buying

net of equity & appreciation

Total Cost of Renting

rent + insurance paid out

Equity Built (5 yr)

Break-Even Year

Year-by-Year Cumulative Costs

Year	Buy Net Cost	Rent Cost	Difference
Calculate to see yearly breakdown

Summary

Compare the true 5-year cost of renting versus buying a home to find your financial break-even point.

How it works

Enter the home purchase price, down payment amount, and mortgage interest rate.
Provide annual property tax rate, homeowner's insurance, and expected maintenance cost.
Enter your current monthly rent and expected annual rent increase percentage.
Set the annual home appreciation rate and your expected investment return (opportunity cost).
The calculator computes monthly mortgage payment, total 5-year costs for both paths, and the break-even year.
Review the cost comparison chart and yearly breakdown to decide which option suits you.

Use cases

Decide whether to rent or buy in your local market.
Find out how many years you need to stay in a home for buying to be worthwhile.
Model different home prices and down payments to fit your budget.
Compare scenarios with different appreciation rates for rising or flat markets.
Estimate how much equity you build in the first 5 years of homeownership.
Quantify the opportunity cost of locking up a large down payment.
Plan finances before making an offer on a house.
Stress-test a rent increase scenario to see when buying becomes cheaper sooner.

Frequently Asked Questions

Last updated: 2026-06-11 · Reviewed by Nham Vu