Rent vs. Buy Calculator
Buying a home is one of the largest financial decisions you'll make. This calculator models what actually happens to your wealth under each path — not just the monthly payment difference, but equity growth, investment returns, opportunity cost, and the transaction fees that most comparisons ignore.
Equity vs flexibility
Adjust the sliders to reveal the break-even point between ownership and renting.
What this calculator models — and why it matters
Most rent-vs-buy comparisons ask one question: is the mortgage payment higher or lower than rent? That's the wrong question. Two households can have identical monthly payments and end up with dramatically different net worth after 10 years, depending on down payment size, market appreciation, maintenance costs, and whether the renter actually invests the difference.
This tool builds a year-by-year wealth model for both paths. On the buyer's side: home equity (market value minus remaining loan), minus transaction costs on an eventual sale. On the renter's side: the down payment equivalent invested from day one, plus the monthly gap between ownership costs and rent, invested every month.
The year those two lines cross on the chart is your break-even point — the minimum tenure required before buying becomes the financially rational choice.
How to fill in the calculator
Garbage in, garbage out. Here's what each field means and where to find realistic numbers for your situation.
Home price and down payment
Use the actual price you're considering, not a wishful estimate. A 20% down payment avoids private mortgage insurance (PMI), which adds 0.5–1.5% per year to your cost and builds zero equity. If you're putting down less, factor PMI in under additional monthly costs.
Mortgage interest rate
Check current 30-year fixed rates with your actual lender or bank — national averages can differ from what you'll qualify for by 0.5–1%, which shifts the break-even year significantly. Use the rate you can realistically get today, not a rate you hope to refinance to.
Monthly rent
If you'd be upsizing when you buy, enter rent for a comparable-sized unit — not your current discounted lease. Comparing a 3-bedroom purchase to a 1-bedroom rental understates renting's monthly cost and skews the results.
Home appreciation rate
The calculator defaults to 3.8% — roughly in line with long-run U.S. averages. If you're in a supply-constrained city with strong job growth, 4–5% might be defensible. If you're in a market with flat population growth, 2–3% is more realistic. Run the model at both ends to see how sensitive your break-even year is.
Investment return rate
The default 8.5% reflects long-run U.S. stock market returns (S&P 500 compound annual return since 1960 is approximately 10.5% nominal, 7–8% real). If you'd keep the renter savings in a savings account rather than invest it, lower this to 4–5%. The renter advantage shrinks considerably.
Time horizon
How long do you realistically plan to stay? Be honest. People chronically underestimate how often life changes — new job, relationship change, family size. If you're uncertain, run the model at 5, 10, and 15 years and see how the verdict changes.
Reading the results
The calculator returns three outputs. Here's what each one tells you:
Break-even year
The year buying's cumulative wealth first exceeds renting's. If you plan to leave before this year, renting is the stronger financial choice — regardless of how you feel about homeownership.
Net worth delta
The dollar difference between buyer and renter wealth at your chosen time horizon. Positive means buying wins; negative means renting and investing comes out ahead.
Year-by-year wealth chart
Watch when the lines cross. Notice how the renter's line often starts higher (invested down payment compounds immediately) and the buyer's line catches up as equity builds and rent inflation erodes the renter's advantage.
Pro tip: run it twiceOnce with optimistic inputs (5% appreciation, 7% stock returns). Once with conservative ones (2.5% appreciation, 9% stock returns). If buying wins in both scenarios, you have genuine conviction. If the verdict flips with a 1% change in appreciation, you're in break-even territory — non-financial factors like stability, school districts, and career flexibility should carry the decision.
A concrete example
Consider someone weighing a $450,000 home purchase with 20% down ($90,000) against continuing to rent a comparable unit at $2,300/month.
What happens over 10 years: The buyer builds roughly $190,000 in equity (appreciation + principal paydown, minus selling costs). The renter's $90,000 invested down payment grows to ~$204,000, and the $1,020/month invested monthly adds another ~$188,000. The renter ends up ahead at year 10 in this scenario — but by year 14, rising rent and continued equity growth flip the comparison in the buyer's favor. Break-even: approximately year 12.
The costs that disappear on both sides
Rent isn't the only money that doesn't come back. Homeowners have their own set of sunk costs — most people underestimate how large they are.
When buying tends to win — and when renting does
These aren't universal rules, but they hold in most markets and most scenarios the calculator is likely to model.
- ✓You plan to stay at least 7–8 years
- ✓Price-to-rent ratio is below 18
- ✓You have 20% down without draining your savings or investment accounts
- ✓Local rents are rising faster than 3% annually
- ✓Your mortgage payment stays under 30% of gross income
- ✓Your timeline is under 5 years
- ✓Price-to-rent ratio is above 25
- ✓Buying would require liquidating your investment portfolio
- ✓Career mobility or life flexibility is a near-term priority
- ✓You'd have little financial cushion left after closing
Common mistakes this calculator helps you avoid
Going "house poor"
Emptying your savings and investment accounts to cover a 20% down payment leaves you owning a major illiquid asset with no financial buffer. One unexpected expense — a job loss, medical bill, urgent repair — becomes a crisis. If buying requires liquidating your emergency fund or stock portfolio, factor the lost compounding returns into your calculation. They're real costs.
Forgetting HOA fees
A $400/month HOA is roughly equivalent to carrying an extra $60,000 in mortgage debt at current rates — and unlike your mortgage, it never goes away and typically increases each year. Always add the HOA fee to your monthly ownership cost before comparing it to rent. Many buyers realize only after purchase that the HOA makes the economics far worse than they modeled.
Anchoring to the mortgage payment
"My mortgage is only $100 more than rent" is a misleading frame. Add taxes, insurance, and maintenance and the gap is typically $700–$1,200/month larger than rent on a comparable home. That difference, invested monthly, is what powers the renter's alternative wealth path in this calculator.
Ignoring the selling costs
Real estate agent commissions, transfer taxes, staging, and repairs before listing typically consume 7–9% of the sale price. On a $500,000 home, that's up to $45,000 gone before you see a cent. The calculator includes this, which is why the break-even year is almost always later than people intuitively expect.
What this calculator doesn't capture
Every model simplifies reality. Here's where the numbers end and where your judgment takes over.
Tax treatment is simplified
The mortgage interest deduction benefits far fewer buyers than it did before 2018 — you need itemized deductions to exceed the standard deduction to gain anything. High earners in expensive markets still benefit meaningfully. For a precise picture, run your numbers with a CPA.
The renter must actually invest the difference
If the monthly savings sit in a checking account or get spent, the renter's wealth advantage disappears. The calculator assumes disciplined investing. If that's not realistic for you, reduce the investment return or set the stock return to 0% and see how the result changes.
Local markets deviate significantly from averages
National appreciation averages include decades of slow markets, booms, and corrections. Your zip code might grow at 6% for 10 years, then stall. Use local data when possible — Zillow, Redfin, and regional appraisal reports publish market-level appreciation history.
Non-financial value is real but unquantifiable
Stability, being able to renovate, owning a yard, school district access, no landlord risk — these matter and the calculator can't price them. When the numbers are close (within 5–10% net worth delta), let your life priorities decide.
Frequently asked questions
Is renting really 'throwing money away'?+
This framing is misleading. A large share of a mortgage payment — interest, taxes, insurance, maintenance — also disappears without building equity. The real question is whether the equity growth and appreciation you gain outweigh what you'd earn by investing that same money. In many markets, especially in the first decade, renting and investing the difference comes out ahead.
What's a realistic home appreciation rate to use?+
The long-run U.S. average is roughly 3–4% annually in nominal terms (closer to 1–2% after inflation). Individual markets vary dramatically — some cities appreciated 8–10% annually from 2012–2022, then flat-lined or corrected. Be conservative: using 5–6% appreciation for a 20-year projection is optimistic unless you have strong local data to support it.
Should I put more than 20% down?+
Only if your mortgage rate exceeds your expected investment return, which is historically uncommon. At a 7% mortgage rate versus an 8.5% stock return, the extra cash earns more in the market than it saves in interest. That said, a larger down payment lowers monthly obligations and stress — if that psychological security has real value to you, factor it in.
How does rent inflation affect the comparison?+
It's one of renting's biggest long-term risks. A fixed-rate mortgage locks your principal and interest payment for 30 years. Rent typically rises 3–4% annually. After 15–20 years, the buyer's housing cost often becomes meaningfully lower in real terms, which tilts the long-run comparison in buying's favor even when renting wins in the early years.
Does the calculator include the tax benefits of homeownership?+
It uses a simplified tax model. Since the 2018 standard deduction increase, the mortgage interest deduction benefits far fewer buyers than it used to — you need itemized deductions to exceed your standard deduction to see any benefit. High earners with expensive mortgages in high-tax states still benefit; most middle-income buyers do not. Check with a CPA for your specific situation.
What if I won't actually invest the monthly savings as a renter?+
Then the renter's advantage largely disappears. This calculator assumes the difference between ownership costs and rent is invested — not spent on lifestyle upgrades. If that discipline isn't realistic for you, the case for buying gets much stronger, since mortgage payments act as forced savings that renters have to replicate voluntarily.
Your numbers stay on your device
All calculations run entirely in your browser. Your down payment amount, income, home price, and results are never sent to our servers. There's no login, no account required, and no data stored.