Rent vs. Buy Calculator

Why most rent-vs-buy comparisons are rigged

The version you usually see — "rent is throwing money away, a mortgage builds equity" — quietly deletes the renter's biggest asset: the down payment they never spent. Put $90,000 down on a house and that cash becomes drywall; keep renting and it stays invested, compounding from day one. Add the costs owning carries that rent doesn't (property tax, insurance, upkeep — often 2–3% of the home's value every year, forever), and the fair comparison is two net worths, not two monthly payments.

That's the model here: both households spend on housing monthly, whoever pays less invests the gap, the renter also invests the buyer's upfront cash, and at your horizon we compare the buyer's equity (net of selling costs) plus side investments against the renter's pot.

How to read the chart

Renting starts ahead — the invested down payment is a head start buying has to run down. Buying gains as the loan amortizes, the home appreciates, and rent inflates upward while the mortgage payment stays flat. Where the lines cross is the break-even year (with some inputs one side stays ahead the whole way — then there's no crossing to find): sell before it and renting won; stay past it and buying pulls away. That's why time-in-the-home dominates this decision — the ~9% round-trip transaction costs need years to amortize.

What actually decides it

Ownership costs and the mortgage rate move the answer most, with home appreciation right behind — a single point on the yearly-ownership-costs field swings this more than a point of investment return. On this page's defaults the verdict leans to renting; push appreciation past about 4¼% and buying takes it — and all of those inputs are within historical experience. Anyone who tells you the answer with certainty is really telling you their forecast. What you can control: how long you stay (longer favors buying), the price-to-rent ratio of your market, and whether you'd genuinely invest the difference.

How long do you have to stay for buying to win?

Longer than most people guess, because ownership is bookended by large one-time costs that only fade with time.

Buying costs roughly 2–5% of the price in closing costs on the way in and around 6–8% in selling costs on the way out. Between them sit ongoing costs that build no equity — property tax, insurance, upkeep, commonly around 2–3% of the home's value a year. On a short stay, those fixed costs dominate everything else: the transaction overhead alone can exceed years of rent, which is why short horizons so often favor renting even when the monthly math looks close.

Stay longer and the picture inverts. The one-time costs amortize over more years, the loan balance falls, and equity accumulates. There's no universal crossover year — it depends on the rent, the rate, appreciation, and what the alternative investment earns — but the shape is always the same: renting tends to win early, buying tends to win late, and the interesting question is where your realistic timeline lands on that curve.

The other half of the comparison is the one that gets skipped: opportunity cost. A renter can invest the down payment — and the monthly difference, when rent is cheaper — instead. The comparison is only honest if that money is actually invested; "renting wins" quietly assumes a discipline that not everyone maintains. The same caution runs the other way: appreciation and investment-return assumptions dominate the output, and both are guesses. Small changes to either can flip the verdict, which is a property of the decision, not a flaw in the calculator.

So "rent is throwing money away" isn't the frame. Both paths spend money on housing; both can build wealth. Time in the home, transaction costs, and what the freed-up cash actually does are what separate them.

Common questions