Should you keep renting or buy a home? Enter your current rent and potential purchase details, set your time horizon, and see which option costs less — accounting for equity build-up, investment opportunity cost, and real-world expenses most calculators ignore.
Pro tip: The break-even point is usually 5–7 years. If you’re not sure you’ll stay that long, renting often wins because closing costs and the early years of a mortgage are mostly interest.
| Year | Rent Cost | Buy Cost | Equity | Renter Invest. | Winner |
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How to Use the Rent vs. Buy Calculator
Fill in both columns: your current monthly rent on the left, and the details of a home you’re considering on the right — price, down payment, interest rate, taxes, insurance, maintenance, and HOA if applicable. Then set how long you plan to stay and the return you’d expect from investing the renter’s savings. The calculator runs a year-by-year simulation and shows you which option costs less over your time horizon.
What the Calculator Accounts For
This is not a simple “monthly payment vs. rent” comparison. On the rent side, it compounds annual rent increases and adds renter’s insurance. It also models what happens if the renter invests the money they would have put toward a down payment and the monthly savings difference. On the buy side, it calculates the full amortization schedule, property taxes, homeowner’s insurance, maintenance costs, HOA fees, and tracks how much equity you build each year through principal payments.
The Opportunity Cost of a Down Payment
A 20% down payment on a $350,000 home is $70,000 in cash. If that money were invested at a 7% annual return instead, it would grow to roughly $107,000 in seven years. This opportunity cost is the most commonly overlooked factor in the rent-vs-buy decision. Our calculator factors it in automatically by growing the renter’s hypothetical investment portfolio at your specified return rate.
Why the Break-Even Year Matters
Buying a home involves significant upfront costs: closing costs (2–5% of the purchase price), moving expenses, and the opportunity cost of tying up your down payment. In the early years of a mortgage, most of your payment goes to interest, not principal. It typically takes 5–7 years before the equity you’ve built outweighs these costs. If you move before the break-even year, renting would have been cheaper. The year-by-year table (available to subscribers) shows exactly when buying overtakes renting.
How Interest Rates Change the Equation
Interest rates have an outsized impact on the rent-vs-buy decision. At 3%, a $280,000 mortgage costs about $1,180/month. At 7%, that same loan costs $1,863 — a 58% increase in monthly payment with no additional value. Higher rates also mean more of your early payments go to interest, slowing equity accumulation. Use the rate input to model different scenarios and see how rate changes shift the break-even point.
Maintenance and Hidden Ownership Costs
The general guideline is to budget 1% of your home’s value per year for maintenance and repairs — that’s $3,500 annually on a $350,000 home. Older homes and larger properties may need 1.5–2%. This includes HVAC servicing, roof repairs, appliance replacements, plumbing, landscaping, and the inevitable surprises. Renters pay none of this — it’s the landlord’s responsibility. This ongoing cost advantage of renting is significant and often underestimated by first-time buyers.
Looking for related tools? Try our Mortgage Calculator to model your future loan payments, or explore all Home & Real Estate tools.
Frequently Asked Questions
Is it cheaper to rent or buy?
Short-term (under 3 years), renting is almost always cheaper due to closing costs, moving costs, and slow early equity build. Long-term (10+ years), buying usually wins because you build equity, and fixed mortgage payments outpace rising rents. The crossover is typically 5 to 7 years in most US markets.
What's the 5-year rule?
A common guideline: don't buy unless you plan to stay at least 5 years. This is the typical break-even period where appreciation and principal paydown overcome transaction costs (closing costs to buy, commissions to sell - roughly 8 to 10 percent round-trip). High-growth markets can break even sooner; flat markets take longer.
How much maintenance should I budget for owning a home?
Plan for 1 percent of home value per year in routine maintenance and 1 to 2 percent per year for capital replacements (roof, HVAC, appliances, windows). On a 400,000 dollar home, that's 4,000 to 12,000 per year. Newer homes lean toward the low end; older homes (30+ years) toward the high end.
Does equity build fast in the first years?
No. Early mortgage payments are 70 to 85 percent interest. On a 300,000 dollar 30-year loan at 7 percent, you pay down only about 3,000 dollars of principal in year one and 250,000 in interest over the life of the loan. Equity build accelerates after year 10 to 15.
Should I factor in the tax deduction for mortgage interest?
Probably not significantly. The 2017 Tax Cuts and Jobs Act doubled the standard deduction, so only about 10 percent of filers now itemize. For most middle-income homeowners, the mortgage interest deduction provides zero net tax benefit. Model the comparison without the deduction to get a realistic picture.