How to use this calculator
- How long you plan to stay: the single most important input.
- Buying: price, down payment, mortgage rate and term, property tax rate, insurance, maintenance (as a share of value per year), HOA dues, and your closing costs when buying and selling costs when you eventually sell.
- Renting: the monthly rent for a comparable home and how fast you expect it to rise.
- Growth and investing: how fast home values rise and what you’d earn investing money not tied up in a house.
The result tells you which option costs less over your time frame and by how much. The chart shows the cumulative net cost of each if you moved at the end of any given year; where the lines cross is the break-even year.
How the comparison works
Both households start with the same cash and spend the same amount each month. The buyer puts the down payment and closing costs into the house. The renter invests that money instead. Each month, whichever option is cheaper invests the difference, so neither side gets a head start just from spending less.
At the end of each year, the calculator works out the net cost of each choice:
- Owner costs are mortgage payments, property tax, insurance, maintenance and HOA dues. Tax and maintenance grow with the home’s value each year.
- Sale proceeds are what you’d get if you sold: the home’s value minus selling costs minus the remaining loan balance.
- Investment gains are the growth on invested money, not the money itself.
The lower net cost wins. Because both sides spend the same total, the gap between them equals the difference in wealth you’d end up with.
Worked example
The defaults: a $400,000 home with $80,000 down at 6.5% for 30 years, 1.1% property tax, $1,800 insurance, 1% maintenance, 3% closing costs and 6% selling costs. The alternative is $2,200 rent rising 3% a year. Home values rise 3% a year and investments earn 5%.
- Owning costs $2,873 a month in year one, versus $2,200 rent. The renter invests the $673 difference.
- After 10 years, the home is worth $537,567 and you owe $271,284. Selling nets $234,029 after 6% selling costs.
- Over those 10 years, the buyer pays $92,000 upfront plus $357,011 in owner costs, for a net cost of $214,982.
- The renter pays $302,646 in rent, but their investments grow by $76,560, for a net cost of $226,087.
Buying comes out $11,105 ahead over 10 years, and the lines cross in year 9. Right after buying, the buyer is already $36,000 behind: the $12,000 of closing costs plus the $24,000 it would cost to sell.
Time is the deciding factor
Same assumptions, different lengths of stay:
| Years you stay | Cheaper option | By |
|---|---|---|
| 3 | Renting | $28,493 |
| 5 | Renting | $20,721 |
| 7 | Renting | $10,321 |
| 10 | Buying | $11,105 |
| 15 | Buying | $66,497 |
| 20 | Buying | $154,995 |
Buying has high one-time costs on both ends. The longer you stay, the more years you have to spread them over and the more equity and appreciation you build.
What moves the break-even year
Changing one input at a time from the defaults:
| Change | Result over 10 years | Break-even year |
|---|---|---|
| 0% appreciation | Renting cheaper by $103,852 | 25 |
| 2% appreciation | Renting cheaper by $30,835 | 15 |
| 4% appreciation | Buying cheaper by $57,071 | 6 |
| Rent $2,000 | Renting cheaper by $23,869 | 15 |
| Rent $2,500 | Buying cheaper by $63,566 | 5 |
| 3% investment return | Buying cheaper by $45,493 | 6 |
| 7% investment return | Renting cheaper by $29,235 | 20 |
| 5.5% mortgage rate | Buying cheaper by $50,009 | 6 |
| 7.5% mortgage rate | Renting cheaper by $28,523 | 15 |
Small changes in appreciation, rent and returns swing the answer by tens of thousands of dollars. Try a pessimistic and an optimistic case before you decide.
Beyond the numbers
- Flexibility has value. Renting makes it easy to move for a job or a change in family plans.
- Stability has value too. Owning fixes your principal and interest payment, while rent can rise faster than you expect.
- Investing the difference only helps if you actually do it. The renter’s advantage depends on investing the down payment and the monthly savings consistently.
- Make sure you can afford it. The home affordability calculator checks the payment against your income, and the closing cost calculator itemizes the cash you’ll need at closing. To explore investment returns on their own, try the investment calculator.
Assumptions and limitations
Mortgage payments are fixed-rate; property tax and maintenance are re-based on the home’s value once a year; insurance and HOA dues stay flat; rent rises once a year. Investment returns compound monthly at a steady rate. PMI, renters insurance, utilities, taxes on investment gains, the mortgage interest deduction and capital gains tax on a home sale are not included. Real markets don’t move at steady rates, so treat the result as a comparison of scenarios, not a forecast.
This calculator is for planning only and isn’t financial advice.
Frequently asked questions
Is it cheaper to rent or buy a house?
It depends mostly on how long you stay, how fast prices and rents rise, and what you'd earn investing the down payment. With this calculator's defaults ($400,000 home, 20% down, 6.5% rate, $2,200 rent), renting is cheaper if you move within 8 years, and buying is cheaper from year 9 on. Change the inputs to match your market.
What is the rent vs. buy break-even point?
It's the first year in which the total net cost of owning drops to or below the net cost of renting. Before that, the upfront costs of buying and the cost of selling outweigh what you gain from building equity. With the defaults, break-even comes in year 9.
Why does the calculator invest the down payment?
Because that's the real alternative. If you rent, the $92,000 you'd have spent on the down payment and closing costs stays yours to invest. At a 5% return it grows by $76,560 over 10 years in our example, money a buyer gives up. Ignoring this makes buying look better than it is.
Does this include the mortgage interest tax deduction?
No. The deduction only helps if you itemize, and what it's worth depends on your whole tax situation, so the calculator leaves taxes out of both sides. Taxes on investment gains and on any home-sale profit above the exclusion are also left out.
How much does home appreciation matter?
A lot, because it compounds on the full home price, not just your down payment. In our example, buying beats renting by about $11,100 over 10 years at 3% appreciation, but renting wins by about $30,800 at 2% and by $103,900 at 0%. Use a conservative figure for your area.
What should I enter for maintenance?
Use a yearly percentage of the home's value that reflects its age and condition. The 1% default is a common planning figure, not a rule; older homes and those with big-ticket items like roofs or HVAC systems nearing the end of their life can cost more. Include it, because renters don't pay it directly.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.