Rent vs. buy

How this calculator works

Buying builds equity and benefits from rising home values, but it comes with closing costs, property tax, insurance, maintenance, and selling costs. Renting is often cheaper month to month, and a renter can invest the down payment and any monthly savings instead. The calculator tracks both paths each year: the buyer's home equity after selling costs plus anything they invest, against the renter's investments. Buying usually wins the longer you stay, which is why the break-even year matters most.

A worked example

The example compares buying a $400,000 home with $80,000 down against renting for $2,200 a month. Owning costs about $2,856 a month in the first year, counting the mortgage, property tax, insurance, and maintenance. Renting costs $2,220 with renters insurance. The renter invests the $80,000 down payment, the $12,000 of closing costs they did not have to pay, and the difference in monthly cost, all at 6%.

After 10 years the buyer has about $234,029: the home's value after 6% selling costs, minus the loan balance. The renter has about $237,289 in investments. Renting is ahead by about $3,260, and buying first pulls ahead in year 11.

Small changes flip the answer. If the rent were $2,600, buying would lead by about $70,195 after 10 years and would pull ahead in year 5. If homes rose 4% a year, buying would lead by about $42,160.

How to read your results

The calculator compares wealth, not monthly payments. The buyer's wealth is what they would walk away with after selling. The renter's wealth is the investment account built from the money not put into a house. Whichever is larger at the year you plan to leave is the better financial outcome under your assumptions.

"Buying starts winning in" is the key row. Buying carries large costs at the start and the end, so it almost always loses over a short stay and usually wins over a long one. The year-by-year table shows the gap closing.

Common mistakes to avoid

• Comparing rent with the mortgage payment only. Owners also pay property tax, insurance, maintenance, and sometimes HOA dues.
• Assuming the renter invests the difference. The comparison depends on it. If the savings would be spent, buying looks better than this shows, because a mortgage forces saving.
• Ignoring the cost of selling. Agent commissions and closing costs take a real share of the sale price.
• Counting on fast appreciation. Home values have risen about 3% to 4% a year over the long run nationally, with long flat stretches in some places.