Rent vs Buy Calculator
Compare the true cost of renting versus buying over your stay, counting appreciation, closing and selling costs, upkeep, PMI and the investment return on your cash, with a break-even year.
How it works
Net cost of buying = FV(down payment + closing costs + every monthly owning cost) − (home value × (1 − selling %) − mortgage balance) · Net cost of renting = FV(every month’s rent + renter’s insurance) · FV grows each amount at the investment return until the end of your stay
Comparing rent with the mortgage payment alone is misleading. Part of the payment builds equity, the home may gain value, and buying ties up a down payment that could otherwise be invested. This calculator follows both paths month by month. The renter pays rent (rising each year) and renter’s insurance. The buyer pays the down payment and closing costs up front, then principal and interest, PMI while the loan is above 78% of the price, property tax, insurance, maintenance and HOA dues, all rising with the cost-increase rate. At the end of your stay the home is sold at its grown value, selling costs and the remaining mortgage are paid, and the cash left is credited back to buying. Every dollar either side spends is also charged the investment return it could have earned, so a large down payment carries a real opportunity cost. The side with the lower net cost is the better deal. The break-even point is the first month in which buying becomes cheaper, and the table shows the result for every length of stay up to 30 years (or longer if you stay longer).
Worked example
Rent of $1,800 a month rising 3% a year, against a $350,000 home with $70,000 down at 6.5% for 30 years, 1.1% property tax, $1,500 a year of insurance, 1% maintenance, 3% closing costs, 6% selling costs, 3% yearly home value growth and a 5% return on savings. Over a 7-year stay the renter pays about $166,900 of rent and insurance; adding the 5% return that money could have earned, the net cost of renting is about $198,200. The buyer pays $80,500 up front and about $216,500 in mortgage payments, tax, insurance and upkeep, and gives up about $75,300 of investment return. Selling the home, by then worth about $430,500, leaves about $151,500 after $25,800 of selling costs and the $253,200 loan balance. The net cost of buying is therefore about $220,800, so renting wins by about $22,600, and buying only breaks even after about 12 years 10 months. Change the stay to 15 years and buying comes out ahead.
Sources: IRS Topic 701 — Sale of your home (capital gains exclusion) · CFPB — When can I remove PMI from my loan?
Frequently asked questions
Why is the mortgage payment not the cost of buying?
The principal part of each payment builds equity that you get back when you sell, and the home may grow in value. What you do not get back is interest, property tax, insurance, upkeep, PMI, closing and selling costs, plus the investment return your cash could have earned. The net-cost figures count exactly that.
What is the break-even point?
It is the first month in which buying costs less than renting, if you sold at that point. Buying carries large one-time costs (closing costs now, selling costs later), so short stays usually favor renting. The break-even depends mostly on how expensive homes are compared with rent: with the default inputs it comes after about 13 years, while in areas where homes are cheap relative to rent it can arrive within 3 to 5 years.
What investment return should I use?
Use what your savings would realistically earn if you kept renting: a high-yield savings rate if you would hold cash, or a long-run stock and bond return of around 5%–7% if you would invest. A higher return makes renting look better, because the down payment has more earning power elsewhere.
Does it include home value growth?
Yes. Enter the yearly growth you expect, or 0% to be conservative. A negative value models a falling market. Selling costs (often 5%–8%) are taken from the sale price, which is why a short stay rarely pays off even when prices are rising.
Are mortgage-interest tax deductions included?
Only if you enter a tax savings rate. Most US households take the standard deduction, so itemizing mortgage interest and property tax saves nothing for them. Leave it at 0 unless you itemize.
Related calculators
This is an educational estimate, not financial advice. Confirm figures with your lender, advisor or tax professional.