FinanceCalcs
Rent vs. Buy Calculator
Compare the true long-term financial outcome of renting vs. buying a home — including equity buildup, investment opportunity cost, and the exact year when buying breaks even with renting.
Accounts for home appreciation, maintenance, taxes, closing costs, and what the down payment could earn if invested instead.
Rent vs. Buy Calculator
After 0 years — Buying Net Worth: $0 | Renting Net Worth: $0
- Buying Net Worth
- Renting Net Worth
"The best investment on earth is earth."
— Louis Glickman
Should you rent or buy?
The rent vs. buy decision is one of the largest financial choices most people make — and the answer is rarely obvious. It depends on how long you plan to stay, local home prices and appreciation rates, current mortgage rates, and what you would do with the down payment if you chose not to buy.
This calculator compares the true net worth outcome of both paths over time. Buying builds equity through home appreciation and mortgage paydown, but comes with closing costs, maintenance, taxes, and insurance. Renting keeps your down payment liquid and investable in the market — which has its own long-term growth potential.
The breakeven year — the point at which buying's net worth surpasses renting's net worth — is the most important output. If you plan to move before that year, renting is often the financially smarter choice. If you plan to stay significantly past it, buying typically wins.
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lightbulb Example Rent vs. Buy Scenario
Suppose you are considering buying a $400,000 home with a 10% down payment ($40,000) at 7% APR over 30 years, versus renting a comparable place for $2,200/month and investing the $40,000 down payment at a 7% annual return.
In the early years, renting wins — the high mortgage payment, closing costs, and interest-heavy early payments make buying expensive relative to renting. But as the home appreciates and equity builds, buying typically gains ground. In this scenario, the breakeven point might fall around year 7–9.
If you plan to stay 10+ years, buying likely builds more net worth. If you plan to move in 3–4 years, renting and investing the difference is often the better financial outcome.
Many people use a rent vs. buy calculator to remove the emotion from this decision and see the numbers clearly before committing to either path.
Rent vs. Buy Calculator FAQs
Is buying always better than renting long-term?
Not necessarily. Buying tends to build more net worth over long time horizons in most markets — but only if you stay long enough to recoup closing costs and benefit from appreciation. In high-cost cities, renting and investing the difference can sometimes outperform buying even over 10+ years, depending on rent-to-price ratios and investment returns.
What is the opportunity cost of a down payment?
If you buy, your down payment is tied up in home equity rather than invested in the market. The opportunity cost is what that money could have earned if invested instead. A $60,000 down payment invested at 7% annually for 10 years would grow to about $118,000 — a meaningful amount that the calculator factors into the renting side of the comparison.
How does home appreciation affect the comparison?
Home appreciation is a major driver of the buying side. The U.S. historical average is around 3–4% annually, though this varies significantly by market. Higher appreciation rates move the breakeven point earlier and make buying more attractive. Lower appreciation — or a flat or declining market — can make renting financially superior even over long periods.
What costs do buyers often underestimate?
The most commonly underestimated homeownership costs are maintenance and repairs (typically 1–2% of home value per year), property taxes, homeowner's insurance, HOA fees, and the transaction costs of buying and eventually selling (closing costs plus agent commissions can total 8–10% of home value). The calculator includes these to give a realistic picture of the true cost of ownership.
Rent vs. buy terminology
Home Appreciation
The annual rate at which the home's value increases. The U.S. historical average is approximately 3–4% per year, though local markets vary widely. Appreciation is a key driver of the buying side's long-term net worth.
Maintenance Cost
Ongoing repairs and upkeep, typically estimated at 1–2% of the home's value per year. A $400,000 home may require $4,000–$8,000 annually in maintenance on average — often more as the home ages.
Investment Return on Down Payment
The annual return the renter earns by investing the down payment in the market instead of using it to buy. This represents the opportunity cost of homeownership and is the primary source of the renting side's wealth accumulation.
Net Worth (Buying)
Home equity (current home value minus remaining mortgage balance) minus total accumulated buying costs — closing costs, maintenance, taxes, insurance, and interest paid.
Breakeven Year
The year at which buying's net worth surpasses renting's net worth. Staying significantly past this point generally favors buying; moving before it typically favors renting.
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