Rent vs. Buy Calculator
Is it cheaper to rent or buy? Compare the full cost of each over the years you expect to stay, counting the mortgage, taxes, upkeep, closing and selling costs, home appreciation, rent increases, and what your down payment could earn if you invested it instead.
Share of the home value
Agent commissions and transfer taxes
What the down payment could earn instead
How the comparison works
- Cost of renting = every month of rent over the years you stay, rising each year by the rent increase
- Cost of buying = down payment + closing costs + mortgage payments + property tax + maintenance + insurance − what you keep when you sell (sale price − selling costs − remaining loan)
- Buying also gives up the return the down payment and closing costs would have earned if invested, so that is added to the cost of buying
- The break-even year is the first year in which buying has cost less than renting
Example. A $350,000 home with 20% down at 6.5% has a $1,769.79 principal and interest payment, about $2,530 a month with tax, upkeep, and insurance. Against $2,000 rent rising 3% a year, with 3% home appreciation and 5% investment returns, buying breaks even in year 7. Over 10 years, buying costs about $240,985 after selling, renting about $275,133, so buying comes out $34,148 ahead.
What moves the answer most
- How long you stay. Closing and selling costs take years to earn back, which is why buying rarely wins if you might move within a few years.
- Home price growth and rent growth. Small changes to either compound over a decade, so try a lower appreciation rate to see how sensitive the result is.
- Maintenance is easy to underestimate. Budgeting 1% to 2% of the home value a year covers roofs, appliances, and repairs that renters never pay for.
- This leaves out the mortgage interest tax deduction, mortgage insurance, and investing the monthly difference between rent and owning costs. Most households now take the standard deduction, so the interest deduction often makes no difference.
Frequently asked questions
Is it better to rent or buy a house?
It depends mostly on how long you will stay and how prices and rents change where you live. Buying usually wins the longer you stay, because closing and selling costs are spread over more years and you build equity. Renting usually wins for short stays.
What is the break-even point for buying a home?
The number of years after which the total cost of owning, net of what you get back when you sell, drops below the total rent you would have paid. It is often somewhere between 3 and 8 years, but high prices relative to rent push it later.
What is the price-to-rent ratio?
The home price divided by a year of rent for a similar home. Under about 15 tends to favor buying, and over about 20 tends to favor renting. The example here is 350,000 ÷ 24,000, about 14.6.
Why does the calculator include investment returns?
Money spent on a down payment and closing costs can’t be invested elsewhere. Counting what it would have earned makes the comparison fair, since a renter keeps that money working.
Does this include mortgage insurance and tax deductions?
No. With less than 20% down, add private mortgage insurance to the cost of buying. The mortgage interest deduction only helps if you itemize, which most households no longer do.
More free budgeting tools
Calculators give estimates from the numbers you enter. They are not tax, legal, or accounting advice.