Rent vs Buy Calculator

The question "should I rent or buy?" is usually argued as though one answer is permanently right. It isn't. For almost any pair of a home and a comparable rental, buying starts out behind and ends up ahead — the only real question is where the crossover sits. That crossover is the break-even year, and it moves a great deal depending on transaction costs, how long you stay, and what you assume about prices, rents, and investment returns. This calculator finds it for your numbers instead of arguing about averages.

Why buying starts behind

Buying begins in a hole because of costs that happen only once. You pay closing costs when you buy, and you pay a commission and transfer costs again when you sell — neither of which builds any equity. On top of that, the money you put down is money you no longer have invested elsewhere. So the comparison here is not "mortgage payment versus rent," which is the comparison that makes buying look obviously better. It is a net-worth comparison: in each year, what would you be worth if you bought and sold that year, versus what would you be worth if you had rented and invested the difference?

How the comparison is kept fair

To keep that comparison honest, both paths are given the same money and the same monthly budget. The buyer puts the down payment and buying costs into the home and starts with no portfolio. The renter keeps that same cash and invests it. Each month, whichever path costs less puts the difference into its own portfolio, so no money is counted twice and neither side gets a free pass. At the end of each year, the buyer's net worth is the sale proceeds — the home's value minus selling costs minus the remaining loan — plus whatever portfolio has accumulated. The renter's net worth is simply the portfolio. Break-even is the first year the buyer's number reaches the renter's.

In the United States, the buying costs you enter cover what the Consumer Financial Protection Bureau lists as closing costs: appraisal fees, tax service fees, title insurance, government taxes, and prepaid items such as property taxes and homeowners insurance held in escrow until your first payment. The CFPB also notes that even where a seller pays some of these, buyers frequently absorb them indirectly through a higher price or a larger loan. Property tax is the other line that varies enormously — rates differ by several times between states and even between counties in the same state — which is why this calculator asks for it rather than assuming a national figure. Look up your own jurisdiction before trusting the result.

Ongoing ownership costs are charged here as a percentage of the home's current value rather than its purchase price. That matters over long horizons: a tax or maintenance budget frozen at what you paid in year one becomes unrealistically cheap by year twenty-five if the home appreciates at all. Maintenance, insurance, and any association dues are combined into a single yearly percentage so you can adjust one number rather than three. A newer condominium with high dues and a older detached house with high upkeep can end up at similar totals by very different routes.

The three numbers nobody can look up

Three of the inputs are not facts and cannot be looked up: home appreciation, rent growth, and investment return. They are assumptions about the future, and no source has the correct value for them. The productive way to use this calculator is not to find "the right" numbers but to change one at a time and watch where the answer flips. If buying wins under every appreciation rate you consider plausible, the decision is robust. If the answer flips between two rates you find equally believable, then the honest conclusion is that the financial case is a coin toss and you should decide on the things a calculator cannot price — how long you actually want to stay, how much you want the freedom to leave, and what a landlord can do to you at renewal.

Rent growth deserves more attention than it usually gets. The principal-and-interest portion of a fixed-rate mortgage never rises, while rent resets at every renewal. A gap that looks small in year one compounds into the single biggest driver of long-run break-even, which is why a market with fast-rising rents can favor buying even when prices look expensive. Property taxes and maintenance do rise with the home's value, so ownership is not truly fixed — but the largest single line in it is.

Why taxes are left out

This calculator deliberately leaves taxes out. Capital gains treatment on a sale, mortgage interest deductibility, taxes on rental income, and taxes on investment returns all differ so much between countries — and change often enough within them — that building them in would mean maintaining several tax codes and quietly producing wrong answers whenever one changed. The comparison here is therefore pre-tax on both sides, which keeps it symmetric but means a large tax preference in your jurisdiction can shift the break-even year. Treat the result as a planning estimate to bring to a mortgage broker or tax adviser, not as financial advice.