Rent vs Buy Calculator

Rent or buy is not really a question about money each month. It is a question about a hurdle. Buying a home means paying a large, one-off toll to get in, a second and larger toll to get out, and a stream of costs in between that no landlord ever bills you for. The rise in the home's value pays that toll back, but slowly. The break even year is simply the year the repayment finally catches the toll, and everything else on this page is an attempt to show you how high the toll is before you commit to it.

Two piles of money you never get back

The clean way to compare renting with buying is to ignore everything that comes back to you and add up only what does not. Economists call that the unrecoverable cost, and once you frame it that way the comparison stops being an argument and becomes arithmetic.

A renter's unrecoverable pile is short. It is the rent, which compounds upward year after year, and a renter's insurance premium of a few hundred dollars a year. That is the whole list.

An owner's pile is long. Mortgage interest, which on a 30 year loan is the single biggest line for well over a decade. Property tax, which follows the home's rising assessed value rather than staying where it started. Home insurance, which has been rising faster than general inflation in much of the country. Maintenance, conventionally taken as 1 to 2 percent of the home's value every year, whether or not anything breaks this year. Any HOA fee. The closing costs paid on the way in, commonly 2 to 5 percent of the price, and the selling costs paid on the way out, commonly 6 to 9 percent once agent commission and seller closing costs are added together. And finally the growth given up on every dollar the purchase has tied up.

Against that single long list sits exactly one credit: the increase in the home's value. Subtract it, and what is left is what owning genuinely cost you over that stretch. Compare it with the renter's pile over the same stretch and the break even falls straight out.

The down payment is not a cost, which is exactly why it costs you

This trips up almost every conversation about buying. A 20 percent down payment on a $420,000 home is $84,000, and it feels like the biggest cost in the deal. It is not a cost at all. It is a transfer. The money leaves your bank account and reappears as equity, and you get it back when you sell. The same is true of the principal portion of every monthly payment: that part of the cheque is savings wearing a bill's clothing.

Work through the algebra and the down payment and the principal cancel out of the comparison completely. What does not cancel is the opportunity. That $84,000, plus the closing cheque, plus every dollar of principal you repay afterwards, is capital sitting inside a house instead of earning a return somewhere else. This page charges the buying side for that, compounded monthly at whatever return you set, and shows it as its own segment in the bar. On the default numbers it is about a quarter of the total cost of owning over fifteen years, which makes it larger than property tax, insurance and maintenance put together.

That choice is the reason this tool often reports a later break even than a lender's calculator does. A tool that ignores forgone growth is quietly assuming your alternative to buying was to keep the down payment in cash under a mattress.

Getting out costs more than getting in

Buyer closing costs get all the attention because they arrive with a signature and a wire transfer. The exit is bigger and almost nobody plans for it. Agent commission averaged 5.46 percent nationally in 2026, with roughly another 2.70 percent in seller closing costs such as title work and transfer taxes, so eight percent of the sale price is a realistic figure rather than a pessimistic one.

Two details make that worse than it first reads. First, the selling cost is a percentage of what the home is worth on the day you sell, not what you paid, so appreciation quietly inflates your exit bill. Second, the two tolls stack. Three percent in and eight percent out is eleven percent of the purchase price handed over to the transaction itself. At 3 percent annual appreciation, that alone takes roughly three and a half years of price growth to repay, before a single dollar of interest, tax or maintenance is considered. This is the real reason short ownership is punished so hard, and it is why every serious source lands somewhere between four and ten years rather than at one or two.

The race nobody names: rent growth against appreciation

Every calculator takes rent growth and home appreciation as two separate inputs, and then nobody mentions that only the gap between them matters. Owning locks your largest housing cost, the mortgage principal and interest, at a fixed dollar figure for thirty years. Renting does not. So the faster rent climbs relative to the home's value, the sooner the fixed payment wins.

The sensitivity is brutal. Holding everything else at the defaults here, rent growing at 3 percent a year gives a break even in year 11. At 2.5 percent it moves to year 12. At 2 percent it slides to year 16, and at 1.5 percent buying never catches up at all within a working lifetime. Half a percentage point on a number most people guess in two seconds is the difference between a sensible purchase and a bad one. It is worth knowing that US asking rents rose 2.3 percent in the year to July 2026, while the FHFA house price index rose just 1.7 percent in the year to the first quarter of 2026. Both are well below the 3 percent that most calculators default to.

Why a bigger down payment usually pulls the break even forward

There is a genuine tug of war here, and which way it falls depends on two numbers. A larger down payment means less borrowed, so less interest. It also means more capital locked in the house, so more growth given up. Whichever rate is higher wins.

With a mortgage at 6.95 percent and an assumed return of 5 percent, borrowing costs more than investing earns, so every extra dollar of down payment helps. On the defaults here, 5 percent down breaks even in year 15, 20 percent down in year 12, and a cash purchase in year 5. Flip the assumption so that the expected return sits comfortably above the mortgage rate, as it did for anyone who locked a sub 3 percent loan in 2021, and the arithmetic reverses: a small down payment becomes the better choice and the cheap mortgage becomes an asset rather than a burden.

What the number is not allowed to know

Four things are left out of the comparison on purpose, and saying so is part of the answer. The mortgage interest deduction is out because fewer than one filer in ten has itemised since 2017, so including it would flatter buying for nearly everyone reading. The capital gains exclusion is out because it shelters a profit rather than reducing a cost. Private mortgage insurance is out because the mortgage calculator models it properly alongside escrow, and this page only needs the interest portion of the payment. And repairs are smoothed into a percentage rather than modelled as the lumpy, badly timed bills they really are.

Two more things cannot be priced at all. A landlord can end a tenancy, and a fixed mortgage payment cannot be raised, so buying purchases a kind of certainty that no spreadsheet converts into dollars. Against that, a mortgage is also a commitment that makes an unplanned move expensive at exactly the moment life has already become expensive.

How to actually use the answer

Run it once with honest inputs, then run it twice more with pessimistic ones. Set appreciation to the 1.7 percent the national index has actually delivered recently rather than the 3 percent every tool defaults to. Set the selling cost to 8 percent rather than 6. If the break even still lands comfortably inside how long you genuinely expect to stay, the purchase survives contact with a bad decade. Sellers in 2025 had owned for a median of 11 years and buyers now expect to stay around 15, so those are reasonable horizons against which to judge the number. If the break even only works on optimistic assumptions, what you have is not a plan, it is a forecast.