How this rent vs buy calculator works
The calculator plays out both choices month by month and compares your net worth at the end. When you buy, you pay a down payment, closing costs and every month a mortgage payment, property tax, insurance, maintenance and any HOA dues. At the end you sell, paying selling costs, and keep the equity — the home's value minus what's left on the loan.
When you rent, you invest the down payment and closing costs you didn't spend, and each month you invest whatever you save compared with the cost of owning. Rent rises each year at the rate you enter. Whichever path leaves you with more money wins, and the break-even year is the first year owning comes out ahead.
Why time horizon matters
Buying has big upfront and exit costs — closing costs plus a real estate agent and other fees when you sell can add up to 8–10% of the home's price. Those costs take years of appreciation and loan paydown to recover, which is why buying usually beats renting only if you stay long enough. Many analyses put the break-even at five to seven years, but it depends heavily on prices, rates and rents where you live.
Getting a realistic comparison
- Use local numbers. Property tax rates, insurance and rent-to-price ratios vary enormously by city.
- Be honest about how long you'll stay. Moving after two or three years usually favors renting.
- Try conservative appreciation. Home prices don't rise every year; test 1–2% as well as 3–4%.
- Look beyond the money. Stability, freedom to renovate and flexibility to move aren't in the numbers but matter.
Frequently asked questions
Is it better to rent or buy?
It depends on your local prices, mortgage rate, how long you'll stay and what you'd do with the money you'd otherwise put into a home. This calculator shows the outcome for your inputs.
What costs of owning does this include?
Mortgage principal and interest, property tax, homeowners insurance, maintenance, HOA dues, closing costs and selling costs. It does not include utilities that you'd pay as a renter too.
How is the renter's wealth calculated?
The renter invests the down payment and closing costs at the start, then invests each month the difference between owning and renting costs. The balance grows at the investment return you enter.
What's a reasonable maintenance budget?
A common guideline is about 1% of the home's value per year, though older homes may need more.
Does this include mortgage interest tax deductions?
No. Many owners use the standard deduction and get no extra benefit, so the calculator leaves this out. If you itemize, buying may look somewhat better than shown.
This calculator is for general informational purposes only and does not constitute financial advice. Housing and investment outcomes vary.