How to use the rent vs buy calculator
- Enter the home price, your down payment and mortgage rate.
- Enter the monthly rent for a comparable home.
- Set how many years you expect to stay, plus your assumptions for home price growth, rent increases and investment returns.
The calculator compares your net worth under both choices and shows the break-even year.
How the comparison works
- If you buy: you pay the down payment and closing costs up front, then the mortgage, property tax, insurance and maintenance each month. At the end, you own the home's value minus what's left on the mortgage and the cost of selling.
- If you rent: you invest the money you would have put into the down payment and closing costs. Each month, whichever option is cheaper invests the difference.
This is the "opportunity cost" approach economists use: it compares both paths fairly, including the growth you'd miss by tying money up in a house.
Rules of thumb
- Price-to-rent ratio: home price ÷ yearly rent. Below about 15 tends to favor buying; above about 20 tends to favor renting.
- The 5-year rule: if you might move within five years, renting is often cheaper because buying and selling costs take years to recover.
Estimates only. Results depend heavily on future home prices and returns, which are uncertain. This is not financial advice.
Frequently asked questions
How does this calculator decide?
It compares your net worth under both choices. If you buy, your wealth is the home's value minus the remaining mortgage and selling costs. If you rent, your wealth is the down payment and closing costs you'd have saved, plus any monthly savings, invested at the return you choose. Whichever is higher after your chosen number of years wins.
What is the break-even point?
The number of years after which buying becomes the better deal. Buying has big upfront and exit costs (closing costs, selling fees), so it usually needs several years to beat renting.
Is buying always better in the long run?
Not always. In areas where homes cost many times the yearly rent, or when mortgage rates are high, renting and investing can come out ahead — especially if you may move within a few years.
What isn't included?
Mortgage interest tax deductions, PMI, rent deposits and moving costs aren't included, and returns are assumed to be steady. Treat the result as a guide, not a guarantee.