Rent vs Buy Calculator
The rent versus buy decision is one of the most significant financial choices most people make. Beyond monthly payment comparisons, the true comparison must account for equity building, home appreciation, maintenance, property taxes, and the opportunity cost of the down payment. This calculator runs a simplified 5-year net cost comparison: on the buying side, it sums mortgage payments and subtracts principal repaid (equity built), adds maintenance at 1% of home value per year and property tax at 1.2% per year, then subtracts estimated appreciation. On the renting side, it sums rent payments and an estimate for renter's insurance. The result shows total out-of-pocket cost for each path over your chosen horizon, helping you see not just which option is cheaper but by how much and when the break-even year occurs. The break-even year is the point at which cumulative buying costs fall below cumulative renting costs. If you plan to move before break-even, renting is likely the sounder financial choice; if you plan to stay well past it, buying builds long-term wealth.
Renting cost: -- | Buying cost: --
What the comparison includes
Buying side: Down payment (upfront cost), monthly mortgage payments for the period, minus principal repaid (equity you keep), plus maintenance at 1% of home value per year, plus property tax at 1.2% of home value per year, minus estimated appreciation gain over the period.
Renting side: Monthly rent payments for the period, plus renter's insurance at $15 per month ($180 per year). The down payment remains available for other investment, which is not modelled here but is an important factor in the full picture.
Factors not included
This simplified model does not include closing costs (typically 2% to 5% of the purchase price), HOA fees, mortgage insurance (if down payment is below 20%), rent inflation, or the investment return you could earn on your down payment if you rented instead. All of these factors should be considered in a full analysis.
Rent vs buy: frequently asked questions
What costs are included in the buying side?
The buying cost includes your down payment, monthly mortgage payments minus equity built (principal repaid), estimated maintenance costs (1% of home value per year), property tax (1.2% of home value per year), and then subtracts estimated home appreciation. The result is the net out-of-pocket cost of ownership over the time period selected.
What costs are included in the renting side?
The renting cost includes total rent payments over the period (monthly rent multiplied by 12 multiplied by years) plus renter's insurance (estimated at $180 per year). It does not include investment returns on the down payment you keep invested, though that is a meaningful offset when deciding.
What is the break-even point?
The break-even point is the number of years after which buying becomes cheaper than renting on a cumulative basis. Before this point, renting costs less in total; after it, buying costs less. If you plan to move before the break-even point, renting is typically the better financial choice.
Why does home appreciation matter so much?
Home appreciation directly reduces the net cost of buying by building equity beyond what you paid. At 3% annual appreciation on a $400,000 home, the house gains roughly $60,000 in value over 5 years, substantially reducing the net cost of ownership. Appreciation is not guaranteed and varies greatly by location and market conditions.
Does this calculator account for tax deductions?
This calculator uses a simplified cost comparison and does not model the mortgage interest deduction or property tax deduction. Those deductions reduce the after-tax cost of buying for itemisers, making buying relatively more attractive. The standard deduction raised in 2017 means many homeowners no longer itemise, so the tax benefit is now smaller for most buyers.
References
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. For informational use only; consult a financial adviser for personalised guidance. See our methodology.