Rent vs Buy Calculator

The only fair comparison: net worth at the end

Comparing a mortgage payment to a rent check is not a comparison — one of them buys you an asset and the other does not. The fair version puts both households on the same footing over the same horizon:

Buyer    puts in the down payment, closing costs, and every monthly carrying cost.
         Ends with the sale proceeds: home value, less selling costs, less the loan balance.
Renter   invests the same down payment and closing costs, and every month invests
         (or withdraws) the difference between buying and renting.
         Ends with the portfolio.

Whichever balance is larger at the end wins. That is the whole model, and it is why the answer flips so sharply on two inputs: how long you stay, and what rent costs relative to the carrying cost.

Why the first years always belong to the renter

Buying starts in a hole. Closing costs of $15,000 are spent the day you sign and come back to you only when you sell, and in the early years almost all of the $2,528.27 mortgage payment is interest, not principal. On these inputs the buyer is behind for five full years — at year 5 the equity is $170,415 against a portfolio of $177,527 — and only crosses over in year 6, at $192,943 against $190,038.

Two things turn it around. Rent grows: by year 10 it is $4,175.27 a month, up from $3,200. And the buying payment is nearly flat: it reaches only $3,865.66 in the same year, because the mortgage payment itself never moves and only taxes, insurance, and maintenance grow with the house. In year 7 the rent bill passes the owner's monthly cost and never goes back.

The break-even rent, which is the number that decides it

Instead of asking "is buying better here", ask at what rent it stops being better. Here that is $2,923 a month: any rent below it and the renter's portfolio wins at the ten-year mark; above it, buying wins. That single number is more useful than a verdict, because you can take it to a listing. If the place you want rents for $2,400 next door, renting is not a failure of discipline — it is the better arithmetic.

The same house, the same mortgage, four different answers. Price-to-rent ratio — not house prices, and not interest rates alone — is what the result is really measuring.

What each assumption is doing

• How long you stay. The strongest lever. Shorten the horizon to five years on the default rent and renting wins by $7,112; the crossover never arrives.
• Home value growth. Raising it from 3% to 5% does not change the monthly cost at all, but it moves the proceeds directly.
• Your investment return. It drives the renter's portfolio, so a high assumed return flatters renting. Use a number you would actually accept as a plan, not a backtest.
• Maintenance. The 1%-of-price rule is $5,000 a year here. Owners who budget nothing for it are comparing a fantasy to a rent check.
• Rent growth. The reason the crossover exists at all. Set it to 0% and buying rarely catches up.

Common mistakes

• Comparing the mortgage payment to the rent check. That leaves out taxes, insurance, maintenance, and the down payment, all of which the buyer pays.
• Counting the whole mortgage payment as "building equity". In year one, $2,167 of the $2,528 payment is interest.
• Forgetting the cost of selling. Six percent of $671,958 is $40,317 — money the renter never spends.
• Assuming the renter saves nothing. The model invests the difference because that is the alternative; a renter who spends it is not in this comparison.

How to use this calculator

1. Enter the home price, down payment, rate, and term you would actually get.
2. Enter property tax, insurance, maintenance, closing costs, and what it would cost to sell.
3. Enter today's rent and how fast rent has been rising where you live.
4. Set your expected return and the years you realistically plan to stay.
5. Read the break-even rent first, then the crossover year — if you will move before the crossover, rent.

Frequently asked questions

How many years does it take for buying to beat renting?

On the default inputs, year 6. Before that the closing costs and the interest-heavy early payments of the mortgage leave the buyer behind, even though the monthly gap is small.

What is a break-even rent?

The rent at which both paths end with the same money — $2,923 a month here. Below it, renting leaves you with more; above it, buying does. It is the most portable number on this page.

Does the answer change if I expect high home-price growth?

Yes, and only in the buyer's favour. Growth raises the sale proceeds without raising the payment, but it also raises taxes, insurance, and maintenance, which are all priced off the home's value.

Should I include the tax deduction for mortgage interest?

This calculator does not. Above the standard deduction it helps the buyer; capital gains tax on the renter's portfolio helps the renter. Neither shifts the crossover as much as the horizon does.

Is renting ever the better long-run choice?

Yes — in high-price, low-rent markets, and whenever you will not stay past the crossover year. Renting also keeps the difference liquid, which matters if your income is variable.

What if I would buy with a smaller down payment?

A smaller down payment raises the loan and usually adds mortgage insurance, which pushes the crossover later. Check what that costs with the PMI calculator before you decide.

Data sources: Payments use the standard amortizing loan formula; taxes, insurance, and maintenance are charged monthly and grow annually with the home's value, and rent grows annually at the rate you set. The renter's portfolio compounds monthly at the annual return you enter, funded by the down payment, closing costs, and each month's difference between buying and renting. Income tax effects (mortgage interest and property tax deductions, capital gains on the portfolio), HOA dues, moving costs, and any change in the home itself are not modeled, and the result is an estimate rather than financial advice. All calculations run in your browser. To see what you can borrow rather than whether to borrow, use the how much house calculator; for the monthly carrying cost in detail, the taxes and insurance calculator.