Rent vs Buy Calculator

Compare the true cost of renting versus buying a home over your planned stay — and find the breakeven year where buying wins.

Inputs

Monthly rent

Home price

Down payment

Mortgage rate

Years you plan to stay

Results

Monthly P&I

$1,825.39

Breakeven year

Beyond 7 yrs

Winner

Renting

Difference

$32,232.63

Cumulative net cost by year

Year	Renting (total)	Buying (net)
1	$21,600.00	$88,949.01
2	$43,848.00	$107,690.65
3	$66,763.44	$126,210.37
4	$90,366.34	$144,492.60
5	$114,677.33	$162,520.68
6	$139,717.65	$180,276.78
7	$165,509.18	$197,741.81

Simplified model: principal + interest only, 3% annual rent growth, no taxes, insurance, maintenance or home appreciation. Treat the breakeven as directional, not gospel.

Comprehensive Guide & Formulas

By CalcSuite Editorial TeamUpdated 17 October 20269 min read

Direct Summary / AI Overview

Breakeven year & costs

Key Takeaways & Benchmarks

✓Buying wins over time via equity buildup; renting wins on flexibility and low upfront cost.
✓The breakeven year — often 5–10 — is where buying becomes cheaper.
✓Time horizon is the single most important input; be honest about it.
✓Add ~1–2% of home value yearly for tax, insurance and maintenance.
✓Don't count on appreciation; treat it as upside, not the thesis.

How the rent vs buy comparison works

Renting is pure expense: every dollar is gone. Buying splits each payment into interest (gone), and principal (yours — it becomes home equity). Early on, interest dominates and buying looks expensive; over time, principal paydown accumulates and rent keeps rising with inflation.

This calculator tracks both cumulatively year by year. Buying's net cost is down payment plus payments minus principal repaid (your equity). Renting's cost grows at 3% annually. The breakeven year is where the lines cross — before it, renting was cheaper; after it, buying pulls ahead.

1
Enter your rent
Current monthly rent.
2
Price the home
Purchase price, down payment % and mortgage rate.
3
Set your horizon
How many years you realistically plan to stay.
4
Find breakeven
The year buying becomes cheaper, plus the year-by-year table.

The model

"Monthly P&I = loan × r ÷ (1 − (1+r)^−360)"

"Buying net cost (year Y) = down + payments − principal repaid"

"Renting cost (year Y) = rent × 12 × 1.03^(Y−1), cumulative"

"Breakeven = first year buying net ≤ renting cumulative"

Worked example

$1,800 rent versus a $350,000 home with 20% down at 6.8%: the monthly P&I is about $1,825 — eerily close to rent. But the down payment is $70,000 upfront, and early payments are mostly interest. Breakeven typically lands around year 6–8 in this scenario, driven by rent inflation and slow equity buildup.

Change one input — plan to stay only 3 years — and renting wins comfortably, because $70,000 tied up plus transaction costs can't be recovered that fast. Time horizon is the variable that matters most.

Deciding wisely

▸Be honest about your horizon — optimism about staying is the costliest input to get wrong.
▸Add 1–2% of home value yearly for tax, insurance and maintenance on top of P&I.
▸Don't count on appreciation; treat it as upside, not the investment thesis.
▸Keep an emergency fund intact after the down payment — houses generate surprises.
▸Model the mortgage payoff itself with the Mortgage Payoff Calculator.

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Frequently asked questions

Is it better to rent or buy?+

It depends mostly on how long you'll stay. Buying has high upfront costs (down payment, closing) that amortise over time, while renting's costs rise with inflation. The breakeven point — where buying becomes cheaper — is often 5–10 years, but varies hugely with prices, rates and rent growth. Enter your numbers above for your situation.

What is the 5% rule for rent vs buy?+

A popular heuristic: multiply the home price by 5% — if annual rent is below that, renting wins; above it, buying wins. On a $350,000 home, 5% is $17,500/year ($1,458/month). It's a rough filter, not a decision — this calculator's year-by-year comparison is far more precise for your actual inputs.

How long do I need to stay for buying to make sense?+

There's no universal number, but transaction costs (agent fees, closing costs, moving) typically consume 8–10% of a home's value when you sell. Staying under 3–5 years rarely lets appreciation and principal paydown recover those costs. The breakeven year above shows your specific crossover.

Does this calculator include property tax and insurance?+

No — it models principal and interest with 3% annual rent growth, keeping the comparison transparent and simple. In reality, add roughly 1–2% of the home's value per year for tax, insurance and maintenance to the buying side. If buying still wins with those added, your margin of safety is comfortable.

What about home appreciation?+

Excluded here for conservatism — appreciation is a guess, while costs are certain. Historically US homes appreciate roughly with inflation over long periods, but local markets swing wildly. Treat appreciation as upside, not as the reason to buy.

Is a bigger down payment always better for the comparison?+

A bigger down payment lowers monthly payments and interest, improving buying's case — but it also ties up cash that could earn returns elsewhere. The comparison that matters is total net cost, which this calculator shows year by year for your exact down payment.

How does the mortgage rate change the answer?+

Sharply. Higher rates raise the monthly payment and slow equity buildup, pushing breakeven years later. At 4% versus 8% on the same home, the breakeven year can shift by half a decade. If rates fall later, refinancing improves buying's math — model your current reality, not hoped-for cuts.

What if I might move for work in a few years?+

Then renting usually wins, even if the monthly payment looks similar. Selling within a few years means transaction costs devour any equity gained, and being forced to sell in a down market compounds the loss. Flexibility has real financial value — price it in.