Rent vs buy calculator
Should you rent or buy? We find the break-even year — when buying builds more wealth than renting and investing the difference — using real closing and selling costs, appreciation, rent growth and investment returns. No email, no lender.
Mortgage rate prefilled with today’s ~30-yr average (7.424%) from our live board — edit freely.
Should I rent or buy? It comes down to time.
Buying a home is loaded with one-time friction costs — closing costs on the way in, and agent plus closing costs on the way out — that can total 8% or more of the price round-trip. It takes years of loan paydown and appreciation to earn those back. The honest way to compare is not payment-vs-rent, but net worth vs net worth: after however many years you stay, would you be wealthier having bought, or having rented and invested the money you didn’t sink into a down payment?
Why we invest the difference
A renter keeps the down payment and closing costs — that money can sit in the market earning a return — and invests any month where renting costs less than owning. We track both a homeowner’s equity (home value minus selling costs and remaining loan) and both sides’ side investments, grow everything at your assumed return, and report the break-even year where the buyer’s net worth overtakes the renter’s. Stay longer than that and buying wins; move sooner and renting would have left you richer. When you’re ready, check today’s real rates and size the payment with our mortgage calculator.
A worked example
Compare a $450,000 home (20% down, today’s rate, 1% annual maintenance, 2% buying and 6% selling costs, 3% appreciation) against renting at $2,400/month growing 3% a year, with any spare cash invested at 5%. In the early years the renter is ahead: the buyer sank ~$99,000 into a down payment and closing costs that the renter instead invested. But the buyer’s equity builds every month and the home appreciates, so their net worth climbs — and somewhere around year 5–6 it overtakes the renter’s. Sell in year 3 and the 8% round-trip friction means renting would have left you richer; stay 10 years and buying pulls clearly ahead. The exact crossover moves with every input — raise selling costs or lower appreciation and break-even slides later.
What trips people up
- Comparing rent to the mortgage payment. That ignores the renter’s invested down payment, plus taxes, insurance, and maintenance a buyer carries. Net worth vs. net worth is the honest test.
- Assuming prices only rise. Appreciation isn’t guaranteed. Try a 1–2% rate and watch how much later break-even arrives — buying short-term is a real risk.
- Underestimating selling costs. Agent commissions and closing can take 6%+ off the sale price. That exit cost is exactly why short stays favor renting.
Common questions
Is it better to rent or buy a house?
It depends mostly on how long you stay. Buying carries large one-time costs — closing costs going in and agent/selling costs coming out — that take years of equity and appreciation to earn back. Before that break-even point a renter who invests the down payment is usually wealthier; after it, the buyer pulls ahead. This calculator finds that crossover year for your numbers.
What is the rent-vs-buy break-even?
It is the year your net worth as a buyer — home equity after selling costs, plus any money you invested on the side — first overtakes your net worth as a renter who invested the down payment and every month of savings. Stay past the break-even and buying wins; sell before it and renting would have left you richer.
Why does this calculator invest the difference?
An honest comparison has to account for opportunity cost. The renter isn't just paying rent — they still hold the down payment and closing costs, which can be invested, plus they invest whatever they save in months when renting is cheaper. Ignore that and buying always looks better than it is. We grow both sides at the investment return you choose so the two paths are compared dollar-for-dollar.
By L.W. Martin, Founder — 20 years in the mortgage business, including 15 running his own brokerage. About → · Updated September 2026.