Rent vs. Buy Calculator
Should you sign a lease or a mortgage? Get a data-driven answer based on your actual numbers, not generic advice.
How This Calculator Works
This calculator uses a total cost of ownership model that goes beyond simple rent vs mortgage payment comparisons. It accounts for:
Renting Costs
- • Monthly rent (with annual increases)
- • Renter's insurance
- • Security deposit opportunity cost
- • No equity building
Buying Costs
- • Mortgage payment (P&I)
- • Property taxes & insurance
- • Maintenance (1-2% of home value/year)
- • Closing costs (both buying & selling)
The key insight: both renting and buying have "unrecoverable" costs. The question is which path costs less over your specific time horizon.
Understanding the Break-Even Point
The break-even point is the most important number in this analysis. It's the year when buying becomes cheaper than renting after accounting for all costs.
🎯 Key Rule
If you plan to move before the break-even year, renting is almost always the better financial choice. Closing costs, agent fees (5-6%), and transaction friction make short-term ownership expensive.
In 2026's high-rate environment, break-even points have stretched to 5-7+ years in many markets. This makes renting increasingly attractive for people who value mobility.
When to Buy vs When to Rent
✓ Consider Buying If:
- • You'll stay 5+ years
- • You have 10-20% down payment saved
- • Your debt-to-income ratio is healthy
- • You want to build long-term wealth
- • Local rent is nearly as expensive as owning
✓ Consider Renting If:
- • You might move within 3-5 years
- • Your job or life situation is uncertain
- • Home prices are inflated relative to rent
- • You prefer investing in stocks over real estate
- • Maintenance and repairs stress you out
Frequently Asked Questions
Is renting really "throwing money away"?
No, this is a myth. Renting pays for shelter, flexibility, and transfers maintenance risk to the landlord. Homeownership has unrecoverable costs too: interest, taxes, insurance, and maintenance. The right question is: which costs less for your situation?
What if I invest the down payment instead of buying?
This is a key consideration. If you can earn 7-10% annually in the stock market, that $100,000 down payment grows significantly. Our calculator lets you compare this investment growth against real estate equity building.
How does location affect the rent vs buy decision?
Location matters enormously. In expensive cities like San Francisco or NYC, renting often makes more sense due to sky-high home prices. In more affordable markets like Austin or Phoenix, buying can be advantageous sooner. Check our cost of living pages for city-specific analysis.