Rent vs. Buy Calculator

Buyers pay a down payment and closing costs at purchase. That cash is tied up in the home — and it's money a renter could instead invest. The calculator treats the buyer's upfront cash as an opportunity cost for the renter, growing it at your chosen alternative investment return so the comparison is fair.

A homeowner's monthly costs include mortgage principal and interest, property taxes, homeowners insurance, HOA dues, and maintenance. Renters pay rent and renter's insurance. The calculator models each month's cash outflow for both sides and invests the difference — whoever pays less in a given month invests the savings at your chosen return rate.

Home equity grows two ways: as you pay down your mortgage principal, and as the home's value changes over time. At the end of the comparison period, the calculator estimates your net home equity — the home's value minus selling costs and your remaining loan balance. Principal payments aren't counted as a separate expense because they're already reflected in the equity you recover at sale.

The calculator lets you set an expected annual appreciation rate, including zero or negative values. Home values are not guaranteed to rise — they can decline, sometimes significantly. The comparison changes materially under different appreciation assumptions, so test a few scenarios rather than relying on a single optimistic number.

The cash a buyer puts into a down payment and closing costs could otherwise be invested. The calculator grows that upfront amount at your chosen alternative investment return for the renter, so renting isn't penalized for keeping its cash liquid. This is the opportunity cost of buying — and it can be substantial over long periods.

Rent typically rises over time. The calculator applies your expected annual rent increase, which can shift the comparison toward buying over longer periods. A flat or slowly rising rent favors renting; aggressive rent growth favors buying. The difference compounds, so the assumption matters more the longer you stay.

Selling a home costs money — agent commissions and other selling fees are deducted from the home's value before calculating your net equity. Over short ownership periods, these selling costs and the upfront closing costs often outweigh the equity built, which is why buying frequently makes more financial sense the longer you stay.

The break-even year is the first year at which buying pulls ahead of renting

financially. It shifts with every assumption — a higher appreciation rate, lower rent growth, a larger down payment, or a different investment return all move it. There may be no break-even year at all if renting stays ahead for the entire period. The calculator reports it only when one exists.

This tool focuses on the core financial trade-offs, but real decisions involve more: mobility and flexibility, tax treatment of mortgage interest and property taxes (disabled by default here), the cost and stress of maintenance, lifestyle preferences, and local market conditions. Use the numbers as one input, not the whole answer.