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Rent vs Buy Calculator

Enter a home you'd buy and the rent for something comparable. See which comes out ahead over your horizon and roughly when buying breaks even.

What the model includes

It is a model, not a forecast. Treat the break-even year as "somewhere around here", and run it again with less optimistic appreciation.

Worked example

A $400,000 home ($80,000 down, 6.5% mortgage) versus renting a comparable place for $2,200/month, over a 7-year horizon, with 3% home appreciation, 3% rent growth and a 5% return on the renter's invested savings. Whether buying wins depends heavily on those last three numbers: at 4% appreciation buying usually pulls ahead within about 5 years; at 1% it may not break even inside 7. That sensitivity is the main takeaway — run an optimistic and a pessimistic case.

Things the model can't price

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Frequently asked questions

Why isn't buying always better than 'throwing money away' on rent?
Buying has large one-time costs (down payment, closing costs) and ongoing costs renters don't pay (property tax, maintenance, selling fees). This model also credits the renter with investing the money a buyer ties up in the house. Over short horizons, renting often wins.
What is the break-even year?
The first year at which the buyer's net position — costs paid minus home equity if they sold — is better than the renter's. Before that year, renting is cheaper.
What assumptions matter most?
Home appreciation, how long you stay, and the investment return on the renter's savings. Small changes in appreciation swing the result a lot, so try a pessimistic and an optimistic case.
Does it account for the mortgage interest deduction?
No. Most households now take the standard deduction, so the tax benefit of mortgage interest is small or zero for them. If it applies to you, buying looks slightly better than shown.
What's the rough rule of thumb for rent vs buy?
The 'price-to-rent ratio': divide the home price by a year's rent for a comparable place. Under about 15 leans toward buying; over about 21 leans toward renting; in between it depends on how long you'll stay and local trends. This calculator does the full year-by-year version.
How long do I need to stay for buying to pay off?
Commonly five to seven years, because the big one-time costs (down payment, ~3% to buy, ~6% to sell) need time to be outweighed by equity and appreciation. Short of that horizon, renting usually wins even in a rising market.
Isn't rent just 'throwing money away'?
So is mortgage interest, property tax, maintenance, and transaction costs — none of which build equity. Renting also frees up the down payment to invest. Over short horizons the renter who invests the difference often comes out ahead; the calculator models exactly that.
What if home prices crash?
Then buying looks much worse: you'd owe on a mortgage larger than the home's value and lose the down payment's worth of equity. Run the calculator with 0% or negative appreciation to see the downside case before committing.

Last reviewed: September 2026. Figures and formulas are checked against their published sources; see the site's data notes.