Rent vs Buy Calculator
Make the smartest housing decision with our comprehensive calculator. Compare total wealth, opportunity costs, tax benefits, and get personalized recommendations.
Rent vs Buy Calculator
Compare the financial impact of renting vs buying a home
Calculator Inputs
$80,000
$4,800/year
Winner
Better by $62,334.642
Break-Even
When buying becomes better
Monthly Difference
More to buy
Recommendations
Buying is Better
Buying will leave you $62,335 wealthier after 10 years.
Long Break-Even Period
It will take 7 years to break even. Consider renting if you might move sooner.
Higher Monthly Costs
Buying will cost $1,205 more per month. Ensure this fits your budget comfortably.
Investment Opportunity
Your $80,000 down payment could grow to $215,305 if invested at 8% annually.
Significant Tax Savings
You'll save $61,938 in taxes over 10 years through mortgage interest and property tax deductions.
Net Wealth Over Time
🏠 Buying leaves you $62,335 wealthier
Cost Breakdown
Buying Costs
Renting Costs
Buying is better
Year-by-Year Comparison
| Year | Home Value | Home Equity | Net Wealth (Buy) | Net Wealth (Rent) | Difference |
|---|---|---|---|---|---|
| 1 | $414,000 | $97,250.591 | $-16,904.051 | $80,850.952 | $-97,755.003 |
| 2 | $428,490 | $115,226.168 | $-16,198.173 | $64,650.129 | $-80,848.303 |
| 3 | $443,487.15 | $133,960.868 | $-14,940.886 | $48,431.394 | $-63,372.28 |
| 4 | $459,009.2 | $153,490.656 | $-13,205.975 | $32,232.564 | $-45,438.539 |
| 5 | $475,074.522 | $173,853.435 | $-11,084.875 | $16,095.774 | $-27,180.649 |
| 6 | $491,702.131 | $195,089.164 | $-8,689.357 | $67.873 | $-8,757.23 |
| 7 | $508,911.705 | $217,239.98 | $-6,154.59 | $-15,799.153 | +$9,644.563 |
| 8 | $526,723.615 | $240,350.334 | $-3,642.601 | $-31,447.715 | +$27,805.114 |
| 9 | $545,158.941 | $264,467.131 | $-1,346.19 | $-46,814.114 | +$45,467.924 |
| 10 | $564,239.504 | $289,639.877 | $506.641 | $-61,828.001 | +$62,334.642 |
📚 Learn More About Renting vs Buying
🏠 The 5-Year Rule
Don't buy unless you plan to stay at least 5 years. Closing costs (2-5% buying, 6% selling) and time for appreciation to offset costs make short-term buying expensive.
Example: $400K home with 8% transaction costs = $32K. Need 5+ years of appreciation to break even.
💰 Hidden Costs of Buying
- Down Payment: 20% = $80K on $400K home
- Closing Costs: 2-5% = $8K-20K
- Maintenance: 1-2% annually = $4K-8K/year
- Property Tax: 1-2% = $4K-8K/year
- HOA Fees: $200-500/month
📊 Hidden Costs of Renting
Rent increases 3-5% annually, no equity building, no tax deductions, and no control over property. After 10 years, you own nothing.
Example: $2,000/month rent at 4% annual increase = $2,960/month in year 10. Total paid: $294K with $0 equity.
📈 Opportunity Cost
Your down payment could be invested instead. $80K invested at 8% annual return grows to $173K in 10 years vs home appreciation at 3-5%.
Key question: Will your home appreciate faster than your investments would grow?
⚠️ Common Mistakes
- Only comparing monthly payment (ignoring total costs)
- Not factoring in transaction costs (8% total)
- Buying when planning to move in 2-3 years
- Ignoring opportunity cost of down payment
- Assuming home prices always go up
- Not considering job/life flexibility
✅ Best Practices
- Use the 5-year rule (stay 5+ years)
- Factor ALL costs (maintenance, tax, insurance, HOA)
- Consider job stability and life plans
- Calculate break-even point
- Compare opportunity cost of down payment
- Don't buy at the top of your budget
How to Use This Rent vs Buy Calculator
Enter Home Details
Input home price, down payment, mortgage rate, and how long you plan to stay.
Add Rent & Costs
Enter current rent, property tax, HOA fees, maintenance costs, and expected appreciation/rent increase rates.
Compare Net Wealth
Review which option leaves you wealthier, see break-even point, and get personalized recommendations.
Frequently Asked Questions
Is it better to rent or buy a home?
It depends on how long you'll stay, local market conditions, and your financial situation. Generally, buying makes sense if you'll stay 5+ years, have stable income, and can afford 20% down. Renting is better for short-term stays (under 5 years), uncertain job situations, or expensive markets where buying costs far exceed renting. Use our calculator to compare your specific situation—it accounts for opportunity cost, tax benefits, and all ownership expenses.
How long do I need to stay in a home for buying to make sense?
At least 5 years, typically. Transaction costs (2-5% closing costs when buying, 6% realtor fees when selling) total 8-11% of home price. On a $400K home, that's $32K-44K. You need time for appreciation and mortgage paydown to offset these costs. In expensive markets or with low appreciation, you may need 7-10 years to break even. Our calculator shows your exact break-even point based on your inputs.
What hidden costs should I consider when buying?
Beyond mortgage payments, budget for: property tax (1-2% of home value annually), homeowners insurance ($1,000-3,000/year), maintenance and repairs (1-2% of home value = $4K-8K/year on $400K home), HOA fees ($200-500/month), closing costs (2-5% = $8K-20K), and potential PMI if down payment is under 20% ($100-300/month). Total hidden costs can add $10K-20K annually. Many first-time buyers underestimate these.
Should I invest my down payment instead of buying?
It depends on expected returns. If you invest an $80K down payment at 8% annual return (historical stock market average), it grows to $173K in 10 years. A $400K home appreciating at 4% annually is worth $592K in 10 years, but you only own the appreciation ($192K) minus costs. Factor in mortgage interest paid, maintenance, and opportunity cost. In high-appreciation markets, buying wins. In flat markets with high costs, investing may be better. Our calculator compares both scenarios.