Rent vs Buy Calculator

How This Calculator Works

The Rent vs Buy Calculator compares the total cost of owning a home to the total cost of renting over your planned time horizon. The buy side sums your down payment, all mortgage payments, property taxes, HOA/insurance, and maintenance — then subtracts home appreciation and the principal you've paid down (equity). The rent side sums your rent year by year, compounding the annual rent increase.

The monthly mortgage is calculated with the standard formula M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan amount (price minus down payment), r is the monthly interest rate, and n is the total number of payments. Property tax, HOA, and maintenance scale with the home value as it appreciates each year.

Assumptions

• Home appreciation: 3% per year — close to the long-term US historical average.
• Maintenance: 1% of home value per year by default — typical rule of thumb for upkeep, repairs, and minor replacements.
• Property taxes and maintenance grow with home value — since they're tied to the current appraised value.
• Fixed-rate mortgage — the monthly principal + interest payment stays constant.
• No closing costs or selling fees — in reality, closing costs (2–5%) and realtor fees (5–6% on sale) push the breakeven later.
• No tax deductions — mortgage interest and property tax deductions are not factored in.
• No investment opportunity cost — the down payment is not assumed to earn returns if invested instead.

Example

Consider a $400,000 home with 20% down ($80,000) at 6.5% for 30 years, with 1.2% property tax, $200/month HOA + insurance, and 1% annual maintenance — vs renting for $2,000/month with 3% annual rent increases over 7 years.

The monthly mortgage is about $2,022. Over 7 years, you pay roughly $80,000 down + $170,000 in mortgage + $38,000 taxes + $16,800 HOA + $31,000 maintenance = $335,800 gross. Subtract about $92,000 appreciation and $22,000 equity built, giving a net buy cost around $222,000.

Rent totals about $186,000 over the same 7 years. In this scenario, renting saves about $36,000 — and the breakeven year is typically around year 9 or 10 before ownership starts to pull ahead.

When Buying Makes Sense

• You'll stay 5+ years. Closing costs and upfront expenses need time to amortize.
• Stable income and job. A mortgage locks you into a location and a monthly obligation.
• Appreciating market. Areas with steady population growth and limited supply tend to beat 3% appreciation.
• You want to build equity. Every mortgage payment converts part of your expense into ownership.
• Rent is high relative to prices. If the monthly rent is close to or higher than the mortgage, buying usually wins faster.

When Renting Makes Sense

• You value flexibility. Renting lets you relocate for jobs, relationships, or lifestyle in 30–60 days.
• Short horizon (under 5 years). Transaction costs alone can eat several percent of the home price.
• High property taxes. States with 2%+ property tax make ownership much more expensive than the base mortgage suggests.
• Uncertain income or career transition. A mortgage is hard to unwind quickly.
• Flat or declining local market. Without appreciation, the buy side loses its biggest offset.
• Maintenance burden. Renting means the landlord pays for the broken furnace, not you.

Frequently Asked Questions

How long should I stay to make buying worth it? As a general rule, you typically need to stay at least 5 years for buying to beat renting. Closing costs, property taxes, and maintenance front-load ownership costs. This calculator shows your personalized breakeven year.

What's included in the "buy" cost? The buy cost includes your down payment, total mortgage payments, property taxes, HOA and insurance, and maintenance over the period. It subtracts home appreciation and the principal you've paid down (equity), giving a true net cost of ownership.

Does this include home appreciation? Yes. The calculator assumes a 3% annual home appreciation rate, close to the long-term US average. Appreciation is subtracted from the buy cost because it's value you retain when you sell.

What if interest rates change? This calculator assumes a fixed-rate mortgage — your rate stays locked for the full loan term. If you use an adjustable-rate mortgage (ARM), your actual payments could differ significantly. Try several rates to stress-test your decision.

Is my data stored? No. All calculations run entirely in your browser. No financial data is collected, stored, or transmitted to any server.