What is a Rent vs Buy Calculator?
A Rent vs Buy calculator is a sophisticated financial tool that helps you determine the "breakeven point"—the exact moment when the total cost of owning a home becomes lower than the total cost of renting. It moves beyond simple monthly payment comparisons to factor in equity growth, tax implications, and the opportunity cost of your down payment.
Deciding whether to rent or buy is one of the most significant financial choices you will make. This calculator accounts for 2026 market projections, including expected home appreciation rates and rental market trends, providing a clear roadmap for your housing journey.
How to Compare Renting vs. Buying
To get an accurate comparison, follow these steps to input your data:
- 1Enter Monthly Rent and InsuranceStart with your current or projected monthly rent. Don't forget to include renter's insurance and any annual rent increase you expect (typically 3-5%).
- 2Detail the Purchase PriceInput the home price, your down payment percentage, and the current mortgage interest rate. These are the primary drivers of ownership costs.
- 3Account for "Hidden" Ownership CostsInclude property taxes, homeowner's insurance, and a maintenance budget (usually 1% of the home's value annually).
- 4Set Your Time HorizonDetermine how long you plan to stay in the home. The longer your stay, the more likely buying is to be the superior financial choice.
Frequently Asked Questions
Is it better to rent or buy a home?
Whether renting or buying is better depends on how long you plan to stay, local home prices, interest rates, and your financial situation. Generally, buying becomes favorable if you stay 5+ years, but in high-cost markets it can take 7-10 years to break even. Renting offers flexibility and avoids maintenance costs, while buying builds equity and offers tax deductions.
How long does it take to break even on buying a home?
The breakeven point — when buying becomes cheaper than renting — typically ranges from 3 to 7 years, depending on your down payment, mortgage rate, property taxes, home appreciation rate, and local rent prices. With a 20% down payment at 7% interest, the breakeven point is usually around 5 years in most markets.
What costs are involved in buying a home?
Home buying costs include: down payment (typically 3-20% of home price), closing costs (2-5% of loan amount), home inspection ($300-$500), appraisal ($300-$600), and ongoing costs like mortgage payments, property taxes (1-2% annually), homeowner's insurance, maintenance (1-2% of home value annually), and possibly PMI and HOA fees.
Does the rent vs buy calculator include selling costs?
No. It compares home equity with the invested balance and does not subtract agent fees or other costs of selling. Including them would move the result toward renting for shorter time horizons.
What does the breakeven year mean?
It is the first year in which home equity is at least as large as the wealth built by renting and investing the difference. If it shows no breakeven, that means buying did not catch up within the years you selected under your assumptions.
Ownership Rules of Thumb
The 5-Year Rule
If you plan to stay less than 5 years, renting is almost always cheaper due to closing costs.
Maintenance Budget
1% - 2%
of home value per year
Opportunity Cost
Remember: Money spent on a down payment is money NOT invested in the stock market.
Methodology by Frank Sterling (pen name of LifeCalc's founder). Not financial advice. Data last verified 2026-09-01.
How this calculator works
The calculator compares two wealth outcomes after a chosen number of years. In the buy scenario, the home value grows at the appreciation rate you set and the mortgage balance shrinks. Buy wealth is home equity: projected home value minus the remaining loan.
In the rent scenario, your down payment plus closing costs (3% of the home price) start in an investment account that grows at your assumed investment return. Each year, if the monthly cost of owning (mortgage payment, property tax, insurance, maintenance and HOA) is higher than rent plus $25 a month of renter's insurance, the difference is invested too. Rent rises each year by your rent increase rate. Rent wealth is the investment balance. The breakeven year is the first year when buy equity is at least the rent-scenario balance.
Mortgage payments use the standard fixed-rate formula. The yearly principal paid is estimated as the annual payment minus one year of interest on the balance at the start of the year, a simplification that slightly overstates interest, so buy equity is a little understated.
Assumptions & defaults
- Home price $450,000, down payment 20%, mortgage rate 6.5%, 30-year term, property tax 1.2% of price, insurance $150 a month, maintenance $300 a month, HOA $0.
- Rent $2,000 a month rising 3% a year, investment return 7% a year, home appreciation 3.5% a year, comparison period 10 years.
- Closing costs of 3% of the price and $25 a month renter's insurance are fixed constants. Selling costs, mortgage-interest and property-tax deductions, inflation, and taxes on investment gains are not modeled.
- A 7% return is an assumption, not a promise. Stock returns vary year to year and can be negative for long stretches.
Worked example
With the defaults, the setup and the 10-year result are (rounded to the dollar):
| Down payment / closing costs / loan | $90,000 / $13,500 / $360,000 |
|---|---|
| Mortgage payment (P&I) | $2,275 a month |
| Total monthly cost of owning | $3,175 (P&I + $450 tax + $150 insurance + $300 maintenance) |
| Monthly cost of renting | $2,025 ($2,000 + $25 insurance) |
| Home value after 10 years | about $634,769 (3.5% a year) |
| Buy: home equity after 10 years | $327,470 |
| Rent: invested balance after 10 years | $351,995 |
| Result | Renting ahead by $24,525; no breakeven within 10 years |
That result is sensitive to the assumptions. Changing one input at a time with the same model: with 5% appreciation, buying finishes about $73,708 ahead after 10 years; with a 5% investment return instead of 7%, buying is about $25,342 ahead; with $2,800 monthly rent, buying is about $105,542 ahead. With the defaults extended to 20 years, renting is still ahead by about $35,731 in this model. Small changes in appreciation, investment return and rent flip the answer, which is why the result is a range of outcomes rather than a verdict.
Limitations: when to talk to a professional
The model leaves out things that can change the answer in either direction: agent and closing fees when you sell (usually several percent of the price), the tax deduction for mortgage interest and property tax if you itemize, taxes on investment gains, the capital-gains exclusion on a home sale, and the fact that many renters do not actually invest the monthly difference.
It also leaves out non-financial factors, such as stability, the freedom to move, control over your space, and the risk of an unexpected large repair. A tax professional can tell you how the deductions apply to your return, and a fee-only financial planner can help you weigh a home purchase against other goals such as retirement savings.
Use it to see which assumptions matter most for your situation, then get real numbers: local rent for a comparable home, a mortgage Loan Estimate, and the property's actual tax bill.