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Rent vs Buy Calculator

Compare long-term costs and net worth impact of renting versus buying a home

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Return if you invest down payment instead
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Key Concepts in the Rent vs Buy Decision

Opportunity Cost

When you buy, your down payment is locked in home equity. If invested in stocks returning 7%/yr, a $100K down payment grows to $386K in 20 years. This "opportunity cost" is often ignored.

Hidden Buying Costs

Maintenance (1-2%/yr), property taxes (~1.2%), insurance, HOA, and closing costs (2-5%) can add 3-5% of home value per year in recurring costs before mortgage interest.

The Break-Even Year

It typically takes 5-10 years before buying becomes cheaper than renting when you factor in all costs. Moving within 5 years almost always makes renting better financially.

Price-to-Rent Ratio

Home price ÷ annual rent. Under 15 = buying likely better. 15–20 = neutral. Over 20 = renting is often cheaper. Many expensive cities have P/R ratios of 30–50+.

Frequently Asked Questions

Is renting throwing money away?
No — rent buys you housing (same as mortgage interest), flexibility, and avoided maintenance/tax costs. The money you don't tie up in a down payment can be invested. Renting is often the smarter financial choice in high-cost cities or if you plan to move within 5-7 years.
When does buying a home make financial sense?
Buying tends to win when: you stay 7+ years, the price-to-rent ratio is below 20, you have 20% down to avoid PMI, local appreciation exceeds inflation, and your total monthly cost is comparable to rent. Tax deductions help if you itemize.
What is the break-even year?
The break-even year is when the net wealth of buying surpasses renting. Before that point, renting + investing the difference produces more wealth. After it, buying builds more equity. It typically ranges from 4 to 12 years depending on local market conditions.