Rent vs Buy Calculator

Compare the costs of renting vs buying a home. Calculate break-even point and make an informed decision with our free rent vs buy calculator.

Compare Renting vs Buying

Renting

$
%
Default: 3% per year

Buying

$
$
20.0% down payment
%
years

Additional Costs & Assumptions

%
%
%
Annual maintenance as % of home value
$
%
Expected annual home value increase
How long you plan to stay
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Renting is Better
Renting is more cost-effective over this time period. Consider buying if you plan to stay longer.
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Total Cost of Renting
$127,419
$2,000/month (initial)
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Total Cost of Buying
$134,938
$2,839/month + one-time costs
⚖️
Break-Even Point
> 5 years
When buying becomes cheaper

Year-by-Year Comparison

YearTotal Rent CostTotal Buy CostDifference
1$24,000$114,071$90,071 more
2$48,720$135,783$87,063 more
3$74,182$157,123$82,942 more
4$100,407$178,082$77,675 more
5$127,419$198,647$71,228 more
Year 1
Total Rent Cost$24,000
Total Buy Cost$114,071
Difference$90,071 more
Year 2
Total Rent Cost$48,720
Total Buy Cost$135,783
Difference$87,063 more
Year 3
Total Rent Cost$74,182
Total Buy Cost$157,123
Difference$82,942 more
Year 4
Total Rent Cost$100,407
Total Buy Cost$178,082
Difference$77,675 more
Year 5
Total Rent Cost$127,419
Total Buy Cost$198,647
Difference$71,228 more

Note: This calculator compares financial costs only. It doesn't account for lifestyle factors, tax benefits, or non-financial considerations. Buying includes closing costs (3% of home price) and subtracts home appreciation. Actual costs may vary.

Rent vs Buy Calculator

Should you rent or buy? This calculator helps you compare the total costs of renting versus buying a home over your planned time horizon.

Understanding Your Results

- Total Cost of Renting: The cumulative cost of renting over your time horizon, including rent increases

- Total Cost of Buying: The cumulative cost of buying, including mortgage payments, taxes, insurance, maintenance, and closing costs, minus home appreciation- Break-Even Point: The number of years it takes for buying to become cheaper than renting
- Recommendation: Based on your inputs, whether renting or buying makes more financial sense

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Factors to Consider

Renting Advantages:

- Lower upfront costs (security deposit vs. down payment)
- No maintenance responsibilities
- Flexibility to move easily
- No property taxes or insurance (included in rent)
- Predictable monthly costs

Buying Advantages:
- Build equity over time
- Potential tax benefits (mortgage interest deduction)
- Home value appreciation
- Fixed mortgage payment (vs. rising rent)
- Freedom to customize your home

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Key Calculations

Renting Costs:

- Monthly rent × number of months
- Annual rent increases
- Security deposit (one-time)

Buying Costs:
- Down payment (one-time)
- Monthly mortgage payments (principal + interest)
- Property taxes
- Home insurance
- Maintenance and repairs
- HOA fees (if applicable)
- Closing costs (one-time)
- Minus: Home appreciation (increases your equity)

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Break-Even Analysis

The break-even point is when the total cost of buying becomes less than the total cost of renting. This typically occurs after several years because:

- Buying has high upfront costs (down payment, closing costs)
- Early mortgage payments are mostly interest
- You need time to build equity and benefit from appreciation

Generally, buying makes sense if:
- You plan to stay 5+ years
- You have stable income
- You have savings for down payment and emergencies
- Home prices are stable or appreciating

Renting may be better if:
- You plan to move within 2-3 years
- You don't have sufficient savings
- You prefer flexibility
- Rent is significantly cheaper than buying

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Additional Considerations

Beyond pure financial calculations, consider:

- Lifestyle: Do you want the stability of homeownership?
- Market Conditions: Are home prices rising or falling?
- Interest Rates: Low rates favor buying
- Tax Situation: Mortgage interest deduction benefits
- Maintenance: Can you handle unexpected repairs?

Remember, this calculator provides financial estimates. Your personal situation, goals, and preferences should also factor into your decision.

Frequently Asked Questions

Q: How long do you need to stay in a home for buying to make sense?
A: Generally, buying makes financial sense if you plan to stay 5-7 years or longer. This allows you to recoup closing costs, build equity, and benefit from home appreciation. The break-even point varies based on your specific situation.
Q: What's included in the cost of buying?
A: Buying costs include down payment, mortgage payments (principal and interest), property taxes, home insurance, maintenance, HOA fees, and closing costs. We subtract home appreciation since it increases your equity.
Q: How do I calculate maintenance costs?
A: Maintenance typically costs 1-2% of your home's value annually. This includes repairs, updates, and general upkeep. For a $400,000 home, budget $4,000-$8,000 per year for maintenance.
Q: What is a break-even point?
A: The break-even point is the number of years it takes for the total cost of buying to become less than the total cost of renting. Before this point, renting is cheaper; after, buying becomes the better financial choice.
Q: Should I buy if I'm only staying 2-3 years?
A: Generally, no. With closing costs, realtor fees, and early mortgage payments being mostly interest, you'll likely lose money if you sell within 2-3 years. Renting is usually better for short-term stays.

Disclaimer

Financial Disclaimer: This calculator is for informational and educational purposes only. The results are estimates and should not be considered as financial, investment, tax, or legal advice. Actual results may vary based on individual circumstances, market conditions, and other factors. Always consult with qualified financial professionals before making financial decisions.

Last updated: December 30, 2025