Free tool
Rent vs buy calculator
Renting isn't "throwing money away," and buying isn't always the smart move. Enter your numbers to see which path costs less over the years you actually plan to stay — counting the down payment, mortgage, upkeep, appreciation, and the equity you get back when you sell.
The home
Renting & how long you'll stay
Assumptions
Buying is cheaper by $11,292 over 7 years
- Total cost to buy
- $144,110
- Total cost to rent
- $155,402
- Net cost to buy$144,110
- Net cost to rent$155,402
Based on your assumptions, owning works out cheaper than renting across this 7-year window once you account for equity you recover at sale.
- Monthly principal & interest
- $1,863
- Loan paid over 7 yrs (P&I)
- $156,479
- Tax, insurance & upkeep
- $67,047
- Home value at sale
- $430,456
- Mortgage balance left
- $255,213
- Equity recovered at sale
- $149,416
- Total rent paid
- $183,899
- Growth on invested down payment
- $28,497
"Total cost to buy" = down payment + principal & interest paid + tax/insurance/upkeep − equity recovered when you sell. "Total cost to rent" = rent paid − the growth you'd earn investing the down payment instead. Lower wins. A negative number means that path actually ended ahead of where you started. Break-even is the number of years where the two costs cross — owning usually starts behind (down payment + closing) and catches up as you build equity, so a longer stay favors buying.
This is a simplified estimate, not financial advice. It ignores taxes (mortgage-interest deduction, capital-gains rules), PMI, HOA dues, rent deposits, and transaction costs on the buy side beyond the sale. Real results depend heavily on your local market and the assumptions above.
The real trade-off
The honest comparison isn't rent versus mortgage payment — it's the total cost of each path over your time horizon. Owning carries large upfront costs (down payment and closing) and a selling fee at the end, but you build equity along the way. Renting frees up that cash to invest. Whether buying wins comes down mostly to one variable: how long you stay.
The 5% rule
A fast sanity check: take the home's price, multiply by roughly 5% (about 1% property tax, 1% maintenance, 3% for the cost of tying up your money), and divide by 12. If a comparable rental costs less than that monthly figure, renting is often cheaper. It's a rough screen — the calculator above is more precise because it uses your real rate, term, and horizon.
The hidden costs of owning
The mortgage is only part of the picture. Property taxes, homeowners insurance, and maintenance typically run 2–3% of the home's value every year — and they rise as the home appreciates. Selling adds agent commissions and closing costs of roughly 6%. Those numbers are why a short stay so often favors renting: you may not be in the home long enough to earn back the costs of getting in and out.
Next steps
If buying looks like the better move, size up the loan and monthly payment with our mortgage payment calculator, then confirm the purchase fits your income with the home affordability calculator. Remember this tool gives an estimate, not advice — your local market and the assumptions you choose drive the result.
Frequently asked questions
Is it better to rent or buy?
It depends on how long you'll stay, your local price-to-rent ratio, mortgage rates, and what you'd otherwise do with the down payment. Buying tends to win the longer you stay, because you spread the upfront costs (down payment and closing) and selling fees over more years while building equity. Renting tends to win for short stays or when home prices are high relative to rents, especially if you'd invest the cash you didn't tie up. Enter your own numbers above to see which way it leans for you.
How many years does it take to break even buying?
Break-even is the point where the total cost of owning drops below the total cost of renting. For many buyers it lands somewhere around 5 to 7 years, but it can be shorter in low-cost markets with cheap mortgages or much longer where prices are high relative to rents. The calculator above accounts for your down payment, ownership costs, expected appreciation, and the equity you recover at sale, so you can test different time horizons.
What is the 5% rule for renting vs buying?
The 5% rule is a quick gut-check: multiply the home's value by about 5% (roughly 1% for property tax, 1% for maintenance, and 3% for the cost of tying up your capital), then divide by 12. If you can rent a comparable place for less than that monthly figure, renting is often the cheaper option; if rent is higher, buying may make sense. It's a rule of thumb — the calculator above is more precise because it uses your actual rate, term, and time horizon.
Is this rent vs buy result financial advice?
No. It's a simplified planning estimate based on the numbers and assumptions you enter. It does not model taxes, PMI, HOA dues, or the full range of transaction costs, and it can't predict your local market. Treat it as a starting point for your own research, not a recommendation.