Rent vs. Buy Calculator
Compare the net cost of owning vs. renting over your time horizon.
Rent vs. buy: there's no universal answer
The right choice depends on four variables: how long you'll stay, rent prices in your area, home prices and rates, and what your down payment could earn invested elsewhere. This calculator models all four over a customizable time horizon to find the actual crossover point for your situation.
Common mistakes: ignoring closing costs (5–8% round-trip on a purchase), underestimating maintenance (1–2% of home value annually), and assuming home appreciation exceeds stock returns (historically it hasn't). Run the numbers with realistic assumptions before letting 'throwing money away on rent' pressure you into a purchase.
Frequently asked questions
What's the break-even point between renting and buying?
For most US markets, buying beats renting once you've owned about 5–7 years. Shorter than that, transaction costs (closing costs, realtor fees, moving) often exceed the equity you build. This calculator factors in all the hidden costs — maintenance, taxes, insurance, HOA, opportunity cost on down payment — to give you a personalized crossover point.
Why does opportunity cost matter so much?
Your down payment and monthly housing premium (the amount your mortgage exceeds equivalent rent) could be invested instead. If that money would grow at 7% in index funds, the 'invest the difference' scenario often beats homeownership on pure financial returns — especially in high-cost markets.
What's the 5% rule of thumb?
Multiply your home's value by 5% per year and divide by 12 to estimate the true ownership cost: 1% property tax, 1% maintenance, 3% opportunity cost on equity. If that number exceeds comparable rent, renting is financially better. Example: a $500,000 house has ~$2,080/month in ownership costs; if you can rent the same place for less than that, renting wins.
Does home appreciation guarantee buying wins?
No. Long-term US home appreciation averages ~3–4% annually — barely above inflation. Stock market returns have historically averaged 7% real. Homes can feel like big returns because of leverage (you bought with 20% down), but the same leverage amplifies losses in a downturn.
What if I plan to stay forever?
Buying almost always wins on long horizons (15+ years) in stable markets, because rent tends to rise while your P&I payment stays fixed on a fixed-rate mortgage. By year 20, homeowner housing costs are often half of what comparable renters pay.
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