How this is calculated
This is a model, not a guarantee. It compares two honest, apples-to-apples totals over the exact number of years you plan to stay. Lower total wins.
- Cost of buying. Each month you pay principal & interest, property tax,
insurance, HOA, and maintenance. P&I uses the standard amortization formula
payment = L·i ÷ (1 − (1+i)−n)on the loanL = price − down payment. Property tax and maintenance are charged on the home's value that year, so they rise as it appreciates; insurance and HOA are held at today's figure. Over your horizon we add one-time closing costs up front and selling costs when you sell, then subtract the equity you recover — the principal you've paid down plus the home's appreciation:buy cost = payments + closing + selling − (principal paid + appreciation). - Cost of renting. You pay rent that grows each year at your rent-growth
rate. Meanwhile a renter can invest the money a buyer sinks into the home — the down payment,
plus any month where owning costs more than renting — earning your investment return. We
credit the renter only the growth of that pot, because the amounts invested are
money either party has and are already reflected in the payment comparison:
rent cost = total rent − investment growth. That growth is the opportunity cost of buying. - The break-even year. Because closing and selling costs are large and hit up front and at exit, renting is normally cheaper in the early years. As equity and appreciation build, buying's total falls below renting's. The first year that happens is your break-even year, marked on the chart. Stay past it and buying tends to win; move before it and renting tends to win.
What this doesn't model: the mortgage-interest and property-tax deductions, PMI when you put less than 20% down, capital-gains treatment on a sale, rent that varies from a smooth annual increase, moving costs, or inflation on insurance and HOA. Appreciation, rent growth, and investment return are assumptions you choose — small changes to them can flip the answer, so treat the verdict as directional, not precise. Data note: default rate, tax, and cost figures reflect typical U.S. conditions as of July 2026.
Frequently asked questions
Is it cheaper to rent or buy a home?
It depends on how long you stay and on your assumptions. Buying carries large one-time costs — closing costs up front and selling costs at the end — so renting is almost always cheaper for the first few years. Over time, mortgage principal and home appreciation build equity that offsets those costs, and buying eventually overtakes renting. The year that happens is your break-even year. This calculator computes it from your own numbers rather than a rule of thumb.
What is the break-even year in a rent vs buy comparison?
The break-even year is the first year at which the total cost of buying — payments plus closing and selling costs, minus the equity you would recover if you sold — drops below the total cost of renting and investing the difference. If you expect to move before your break-even year, renting usually wins; if you will stay past it, buying usually wins.
Does this calculator include the opportunity cost of the down payment?
Yes. A renter can invest the money a buyer would sink into a down payment, plus any month where owning costs more than renting. We grow that invested amount at your chosen investment return and credit only its growth to the renter — because the principal itself is money either party has, and is already reflected in the payment comparison. That growth is the opportunity cost of buying.
Does this calculator store or send my numbers anywhere?
No. Everything runs locally in your browser; nothing you type is transmitted to a server. The "copy shareable link" button encodes your inputs into the URL itself, so only people you send that link to can see them.
Estimates only — not financial advice. Results depend heavily on your assumptions about appreciation, rent growth, and investment returns, none of which are guaranteed. This is an educational model, not a recommendation to rent or buy, and not a substitute for a licensed financial advisor, real-estate professional, or your own research. No liability is accepted for decisions made from these results.