Rent vs Buy Calculator
Compare renting and buying by ending net worth, counting the return you could earn by investing the down payment and monthly savings instead.
Want to understand the concept, not just the number? Read The Rent vs Buy Guide and more below.
How it's calculated
Buying is not automatically better than renting. The fair comparison puts the same money to work in both cases. The buyer spends it on a mortgage, taxes, insurance, and upkeep. The renter pays rent and invests everything they did not spend, starting with the down payment and closing costs that the buyer tied up in the house. After the years you plan to stay, whoever has the higher net worth came out ahead.
Take the default here. A $400,000 home with 20 percent down, a 6.5 percent mortgage, and 3 percent yearly appreciation, against renting at $2,200 a month. Over seven years the buyer ends with about $173,101 in home equity after selling costs. The renter, investing the down payment and the monthly savings at a 6 percent return, ends with about $201,119. Renting wins here by roughly $28,018.
That gap flips with time. The longer you stay, the more appreciation and principal paydown work for the buyer, while the large upfront and selling costs get spread over more years. Faster appreciation, a lower investment return, or cheaper closing costs all tilt it toward buying. Change the years you will stay, the appreciation, and the investment return to find the point where buying pulls ahead for you.
Assumptions
- Both paths assume the same monthly budget. The renter invests the down payment, closing costs, and any monthly amount the buyer spends above the rent.
- Home value, rent, taxes, insurance, and maintenance grow each year at the rates you set. State tax effects and the mortgage-interest deduction are not modeled.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
Is it better to rent or buy?
It depends on how long you stay, how fast homes and your investments grow, and the costs of buying and selling. Short stays usually favor renting, because the upfront and selling costs are large and appreciation has little time to work. Longer stays usually favor buying. This calculator finds the answer for your own numbers.
Why does renting sometimes win?
Because buying has big one-time costs, and the down payment could have been invested instead. If you sell after only a few years, appreciation and principal paydown may not cover those costs, so a renter who invested the difference can end up richer. That opportunity cost is the part most rent-vs-buy tools leave out.
What is the break-even point?
It is the number of years you need to stay for buying to catch up with renting and investing. Below it, renting comes out ahead. Above it, buying does. The chart here shows the two paths, so you can read your crossover point off it.
What costs does this include for buying?
The mortgage, property tax, home insurance, and maintenance each year, plus closing costs to buy and selling costs at the end. It nets your home equity against all of that, and compares the result to renting while investing the difference.
What return should I use for the investment side?
Use what you would realistically earn on the money if you rented instead, often a diversified market return of around 6 to 7 percent before inflation. A higher return favors renting, since the invested down payment grows faster, so it is worth testing a range.