Rent vs. Buy Calculator

How the Rent vs Buy Calculator Works

This calculator compares the total cost of renting against the total cost of buying over your selected time horizon. It accounts for factors that most simple comparisons miss: opportunity cost of your down payment if invested, annual rent increases, home appreciation, closing costs on both buying and selling, maintenance expenses, and equity buildup through mortgage payments.

Why Time Horizon Matters Most

Buying a home has large upfront costs — closing costs average 2-5% of the price, and selling later costs another 5-6% in agent commissions and fees. These transaction costs mean buying only makes financial sense if you stay long enough to recover them through equity growth and appreciation. For most markets, the break-even point falls between 3-7 years. If you plan to move sooner, renting usually wins the math.

The Opportunity Cost of a Down Payment

Money used for a down payment could be invested in the stock market, which has historically returned around 7% annually after inflation. This calculator factors in that opportunity cost for the renting scenario. A $80,000 down payment invested for 10 years at 7% would grow to roughly $157,000. However, the home you buy with that down payment is also growing in value — and you get to live in it while it appreciates.

Hidden Costs of Homeownership

Maintenance costs are the expense most new homeowners underestimate. Budget 1-2% of the home value annually for repairs and upkeep. Property taxes, homeowner insurance, and potential HOA fees add to the monthly cost. On the flip side, renters face annual rent increases averaging 3-5% in most markets, which compounds significantly over a decade. Use our mortgage calculator to see your full monthly housing cost as an owner.

When Renting Wins

Renting is often the better financial choice if you plan to stay less than 3-5 years, live in an extremely expensive market where price-to-rent ratios exceed 20, expect to relocate for career reasons, or prefer the flexibility to move without selling. Renting also wins if you can invest the difference between renting and buying costs and earn strong returns. Check our renter guide for tips on getting the most value as a tenant.

When Buying Wins

Buying typically wins over 5+ years in markets with moderate home prices, steady appreciation, and rising rents. The mortgage interest deduction provides a tax benefit, and each monthly payment builds equity. Over a 30-year mortgage, you end up owning an asset outright while a renter has nothing to show for decades of payments. Start the buying process with our home buying guide.