The rent vs buy decision is one of the biggest financial choices you'll make. This calculator compares the true total cost of renting (rent + renter's insurance + investment returns on savings) versus buying (mortgage + taxes + insurance + maintenance + closing costs − equity buildup − appreciation − tax benefits) over your chosen timeframe.
Buying isn't always better than renting. In expensive markets with low appreciation, renting and investing the difference can yield higher net worth. The breakeven point is typically 5-7 years — buying for less than that often loses money due to closing costs and transaction fees.
The hidden costs of homeownership are substantial: maintenance (1-2% of home value/year), property taxes (0.5-2.5%), insurance, HOA fees, and the opportunity cost of your down payment. A $60,000 down payment invested at 8% grows to $129,000 in 10 years.
Home appreciation averages 3-4% nationally but varies wildly by market. Some areas appreciate 8-10% annually while others stagnate. Don't assume your home will appreciate — it's a risk, not a guarantee.
Rent vs Buy Net Cost Comparison
Net Buy Cost = Purchase Costs + Mortgage Payments + Taxes + Insurance + Maintenance − Equity − Appreciation − Tax Savings
Net Rent Cost = Total Rent Paid + Renter's Insurance − Investment Returns on saved down payment/difference. The lower net cost wins.
$400,000 home vs $2,200/month rent, with $80,000 down at 6.5% over 10 years.
Result: Net buy cost: ~$248,000. Net rent cost: ~$304,000 − $77,000 investment gains = ~$227,000. In this case, renting is slightly cheaper over 10 years.
No. In expensive markets, if you're staying less than 5 years, or if rent is significantly below equivalent mortgage payments, renting and investing the difference can build more wealth.
You should plan to stay at least 5-7 years to recoup closing costs (3-6% of purchase price) and transaction costs of selling (6-8%). Buying for less than 5 years usually loses money.
Divide home price by annual rent. Under 15: buying favors. 15-20: borderline. Over 20: renting likely wins. Example: $400,000 ÷ $26,400/year = 15.2 (borderline).