Rent or buy? Find the break-even year.
Put renting and buying side by side over the years you plan to stay. See the total cost of each, the year buying pulls ahead, and how much equity you build along the way.
The home
What the numbers say
Cost of buying vs renting over time
The bottom line
Year-by-year cost
Cumulative cost of each path. Buying counts the down payment, closing costs, mortgage, tax, insurance and upkeep, minus what you would clear if you sold that year. Renting counts rent plus renter insurance.
| Year | Cost to buy | Cost to rent | Difference | Home value | Equity |
|---|
Rent vs buy, explained
Rent vs Buy: The Full Financial Picture
The rent vs buy decision involves far more than comparing a monthly rent payment to a mortgage payment. Buying a home involves upfront costs like closing fees (2-5% of the price) and ongoing expenses including property taxes, insurance, and maintenance. Renting offers flexibility and eliminates these costs, but rent payments build no equity. A thorough comparison must account for opportunity cost, home appreciation, tax benefits, and how long you plan to stay.
Hidden Costs of Homeownership
Beyond the mortgage, homeowners should budget for property taxes (averaging 0.5-2.5% of home value annually), homeowners insurance ($1,200-$3,000 per year), and maintenance costs (typically 1-2% of the home value each year). HOA fees, if applicable, can add $200-$500 per month. These expenses can easily add $500-$1,500 or more to your monthly housing costs beyond the principal and interest payment alone.
How Long Should You Stay to Make Buying Worth It
Most financial analyses suggest you need to stay in a home at least 5-7 years for buying to outperform renting. This break-even period accounts for closing costs on both the purchase and a future sale, which typically total 8-10% of the home price combined. In rapidly appreciating markets the break-even may come sooner, while in flat or declining markets it could take longer than a decade.
Building Wealth: Renting and Investing vs Buying
A common argument for buying is that it forces savings through equity buildup. However, disciplined renters who invest the difference between renting and owning costs can also build substantial wealth. The S&P 500 has historically returned about 10% annually, while national home prices have appreciated roughly 3-4% per year. The best choice depends on your local housing market, investment discipline, and personal financial goals.
Common questions
Is it always better to buy than rent?
Not necessarily. Buying makes more financial sense if you plan to stay at least 5-7 years. In expensive markets with low rent-to-price ratios, renting and investing the difference can build more wealth.
What costs does this comparison include?
The calculator accounts for mortgage payments, property taxes, insurance, maintenance, closing costs, and home appreciation on the buying side, and rent payments with annual increases on the renting side.
How does home appreciation affect the result?
Home appreciation (historically ~3-4% annually) builds equity over time. However, this is not guaranteed and varies greatly by market. The calculator lets you see how different appreciation rates change the outcome.
Estimates for planning only. The real answer depends on your local market, how long you actually stay, appreciation that is never guaranteed, tax treatment and the discipline to invest any savings. Confirm every figure before you decide.