Rent vs Buy Calculator
Should you rent or buy a home? This free rent vs buy calculator compares the true cost of both options over time — including mortgage interest, property tax, insurance, maintenance, home appreciation, and the investment returns you could earn by renting and investing the difference.
The answer depends heavily on your time horizon, local market, and investment returns. In high-cost cities, renting and investing often wins. In affordable markets with strong appreciation, buying breaks even faster. This calculator gives you a personalized break-even year so you can make the decision with real numbers, not rules of thumb.
After 10 years, renting builds $35,245 more net worth. Buying doesn't break even within your time horizon.
Break-even formula: Find the year where Home Equity (appreciated value - mortgage balance) exceeds Invested Savings (down payment + monthly savings compounded at investment return rate)
Home details
$80,000 down · 20%+ avoids PMI
30-yr fixed: ~6.5% (2026)
Typically 0.5–2.5% of home value
Rule of thumb: 1% of home value/year
Historical average: ~3%
Rent details
Historical average: ~3%
S&P 500: ~7% real return
How long before you might sell or move?
After 10 years
Buy net worth
$266,283
Home equity (value - mortgage)
Rent + invest net worth
$301,528
Invested savings + growth
Total buy cost
$405,808
Interest + tax + insurance + maintenance
Total rent cost
$275,133
Cumulative rent payments
Year-by-year comparison
| Year | Buy Equity | Rent Invested | Advantage |
|---|---|---|---|
| 1 | $95,577 | $97,551 | Rent +$1,975 |
| 2 | $111,753 | $115,973 | Rent +$4,220 |
| 3 | $128,556 | $135,315 | Rent +$6,759 |
| 4 | $146,013 | $155,632 | Rent +$9,619 |
| 5 | $164,155 | $176,982 | Rent +$12,827 |
| 10 | $266,283 | $301,528 | Rent +$35,245 |
How to use this calculator
Home price — The purchase price of the home you're considering. Use the actual listing price or a realistic estimate for your target neighborhood. Don't forget that more expensive homes mean higher property taxes, insurance, and maintenance costs — not just a bigger mortgage.
Down payment (%) — The percentage of the home price you pay upfront. Putting down 20% or more avoids Private Mortgage Insurance (PMI), which typically adds 0.5–1.5% of the loan amount per year. If you can't reach 20%, factor PMI into your decision.
Mortgage rate — The annual interest rate on your mortgage. As of 2026, 30-year fixed rates are around 6–7%. Your actual rate depends on your credit score, down payment, and lender. Even a 0.5% difference in rate can mean tens of thousands over the life of the loan.
Property tax, insurance, maintenance — These are ongoing annual costs expressed as a percentage of home value. Property tax varies widely by state (0.5% in Hawaii to 2.5% in New Jersey). Insurance depends on location and risk. Maintenance follows the 1% rule: budget 1% of home value per year for repairs and upkeep.
Home appreciation — The expected annual increase in home value. The long-term US average is about 3–4%, but this varies dramatically by market. Some cities appreciate 8–10% in boom years; others barely keep up with inflation.
Monthly rent & rent increase — Your current or expected rent, and how much it rises each year. The national average rent increase is about 3% per year, but in high-demand cities it can be 5–8%. This matters because rent increases are the hidden cost of renting long-term.
Investment return — The annual return you expect from investing the money you save by renting. The S&P 500 has returned about 7% real (inflation-adjusted) historically. This is the opportunity cost of tying up money in a home instead of the stock market.
Time horizon — How long you plan to stay in the home. This is the most critical variable. Buying has high upfront costs (closing costs, down payment), so you need enough years for appreciation and equity building to overcome those costs. The break-even point is typically 5–8 years.
Real-world examples
High-cost city: San Francisco
A $1.2M home with 20% down at 6.5% vs. $3,500/month rent. Property tax at 0.7%, maintenance at 1%, appreciation at 4%. Over 10 years, renting and investing the difference builds ~$180K more net worth. The high purchase price means massive interest payments that overwhelm appreciation. In this scenario, buying doesn't break even for about 14 years.
Affordable market: Midwest suburb
A $250K home with 20% down at 6.5% vs. $1,400/month rent. Property tax at 1.5%, maintenance at 1%, appreciation at 3%. Over 10 years, buying builds ~$45K more net worth. The lower price means manageable mortgage payments, and the break-even point is only about 5 years. In affordable markets, buying often wins sooner.
Short-term stay: 3 years
A $400K home with 20% down. Closing costs alone (~$8K) plus early mortgage interest (mostly interest in the first years) mean buying loses to renting by ~$50K+ over just 3 years. Closing costs on sale (another 6–8%) add further losses. If you might move within 5 years, renting is almost always the better financial choice.
Formula & Methodology
Monthly mortgage payment (P&I)
- M = Monthly payment (principal + interest)
- P = Loan amount (home price - down payment)
- r = Monthly interest rate (annual rate / 12)
- n = Total number of payments (years × 12)
Home equity (each year)
Rent + invest net worth (each year)
Where monthly savings = total monthly buying cost - monthly rent. Invested savings compound monthly at the specified investment return rate.
Break-even year
The first year where home equity exceeds invested savings. Before this point, the renter's invested savings outpace the buyer's equity. After this point, the buyer's equity grows faster due to home appreciation and mortgage paydown.
Assumptions & limitations
- Closing costs are estimated at 2% of home price, spread over the time horizon. Selling costs (6–8%) are not included.
- PMI is not included. If your down payment is below 20%, add 0.5–1.5% of the loan amount to annual costs.
- HOA fees are not included. Add them to maintenance if applicable.
- Mortgage interest tax deduction is not factored in. If you itemize, buying becomes more favorable.
- Investment returns are assumed constant. Real markets fluctuate significantly year to year.
- Rent savings are assumed to be invested consistently each month. In practice, spending habits vary.