Rent vs Buy Calculator
Compare the true cost of renting versus buying.
Details
Buying
Renting
Cheaper over 7 years
Buying
by $36,914 in net cost
Net cost to buy
$119,100
Net cost to rent
$156,014
1st-month cost to own
$2,305.62
1st-month cost to rent
$2,215.00
Break-even point
This compares the total cost of renting against buying over a period you choose, including transaction costs and equity built.
It gives the break-even point: how long you need to stay for buying to come out ahead.
Whether renting or buying costs less
"Rent is throwing money away" is the phrase that starts most of these decisions, and it leaves out two large costs on the buying side.
The first is transaction costs. Buying a $400,000 home costs around $12,000 to close, and selling it costs around $30,000 in commission and fees. That is roughly $42,000 that buys no equity at all, paid at both ends.
The second is mortgage interest. In the first year of a $360,000 loan at 6.5%, you pay $23,282 of interest and $4,024 of principal. About 85% of those payments build nothing, which is the same complaint people make about rent.
None of that means buying is wrong. It means the answer is how long you will stay, not which option is virtuous.
Add the first year's $23,282 of interest and property tax, insurance and maintenance on top. This is what a short hold has to overcome.
What to enter
- Monthly rent and expected increases
- Rent usually rises over time, which works in buying's favour over a long horizon.
- Home price and down payment
- The purchase side. The down payment is also money that stops earning a return elsewhere.
- Mortgage rate and term
- Determines the payment and how much of it is interest in the early years.
- Property tax, insurance, maintenance
- Ownership costs a renter does not pay. Budget roughly 1% of value a year for maintenance alone.
- How long you will stay
- The deciding input. Everything else adjusts the break-even; this is what you compare it against.
Costs that only one side pays
- Only buyers pay
- Closing costs, selling commission, property tax, homeowners insurance, maintenance, HOA fees and PMI below 20% down.
- Only renters pay
- Rent increases, and renters insurance, which is far cheaper than homeowners insurance.
- The opportunity cost
- A renter can invest the down payment. Over a long period that return is a genuine part of the comparison.
- What buyers gain
- Equity from principal payments and any appreciation, plus a housing cost that stops rising once the loan is fixed.
What this assumes
Appreciation is an assumption, not a fact. Values can fall, and a fall during a short hold is what turns a purchase into a loss.
Non-financial factors are not modelled: stability, freedom to change the property, and the flexibility to move quickly.
How to calculate renting against buying
Total the real cost of each side over your expected stay, then compare.
- transaction costs
- Closing costs to buy plus commission and fees to sell
- equity built
- The principal portion of payments only, not the whole payment
Total the renting cost. Rent over the period with expected increases, plus renters insurance, minus any return on the down payment you did not spend.
Total the buying cost. Mortgage payments, property tax, insurance, maintenance and HOA, plus closing costs at the start and selling costs at the end.
Subtract what you get back. Equity from principal payments plus appreciation. Only the principal portion counts, and early on that is small.
Find where the lines cross. That is the break-even. Staying comfortably past it favours buying; anything shorter favours renting.
See a worked example: why a short hold favours renting
- Home
- $400,000, 10% down at 6.5%
- Loan
- $360,000 over 30 years
Transaction costs: about $12,000 to buy and $30,000 to sell, so roughly $42,000.
First year of the loan: $23,282 of interest against $4,024 of principal.
So after a year you have paid over $27,000 in loan payments and built $4,024 of equity, with $42,000 of transaction costs on top.
Appreciation is what can close that gap, and over one or two years it is far from guaranteed. Over five to seven years, rising rent and growing equity usually tip it the other way.
About $42,000 of costs before equity begins
Frequently asked questions
Commonly five to seven years, though it depends heavily on your market, the rent-to-price ratio and what happens to values.
The reason is transaction costs. Roughly $42,000 on a $400,000 home has to be absorbed, and it is paid whether you stay one year or twenty.
Only if you also count mortgage interest, property tax, insurance, maintenance and transaction costs the same way, and those are substantial.
In the first year of a $360,000 loan at 6.5%, $23,282 goes to interest and $4,024 to principal. About 85% of the payments build no equity either.
It is real, and it starts slowly. Early payments are mostly interest, so equity from payments accumulates gradually for years. See the amortization page for the shape of it.
Appreciation usually contributes more early on, and appreciation is the part you do not control.
Yes, for an honest comparison. $40,000 that goes into a deposit could otherwise be invested, and over a long period that forgone return is a genuine cost of buying.
It cuts both ways. Most renters do not actually invest the difference, so the theoretical comparison and the real outcome often diverge.
Less than they used to. Mortgage interest and property tax are deductible, but only if you itemise, and since the standard deduction roughly doubled in 2018 most filers do not.
Check whether your itemised deductions would actually exceed the standard deduction before counting any tax benefit in the comparison.
Uncertainty itself favours renting, because the cost of guessing wrong is asymmetric. Selling early is expensive; staying longer in a rental is not.
A job that might relocate, a relationship in flux, or an unsettled career are all reasons the flexibility is worth more than the equity.
Problems people actually run into
Comparing rent against the mortgage payment alone
$2,275 of rent against a $2,275 mortgage payment looks like a wash. It is not: the buyer also pays property tax, insurance, maintenance and HOA fees, which commonly add $500 to $800 a month.
Compare total monthly housing cost, and add closing and selling costs spread across the years you expect to stay.
Assuming prices only go up
Appreciation is what makes a short hold work, and it is not guaranteed. Values fell substantially in many US markets between 2007 and 2012, and took years to recover.
Run the comparison at 0% appreciation. If buying only wins when prices rise, you are making a bet on the market as well as buying a home.
Results are estimates for general information only and are not professional financial, medical, or legal advice. Read our full disclaimer.
Last updated: September 4, 2026