Rent vs. Buy Calculator (Break-Even and Total Cost)

Compare renting vs. buying by estimating total net cost, break-even time, and equity over the years you plan to stay. Use Advanced options to include taxes, insurance, maintenance, PMI, growth rates, and investing assumptions.

How to use this calculator

1. Enter how many years you expect to live there. This sets the timeline for the comparison.
2. Type your monthly rent for a place similar to the home you would buy.
3. Enter the home purchase price and your down payment percent.
4. Enter the mortgage interest rate and choose the mortgage term (like 30 years).
5. Open Advanced options if you want to include extra real-world costs (insurance, property tax, HOA, repairs) and one-time costs (closing costs and selling costs).
6. If you want a more realistic long-run view, set rent increase, home price growth, and investment return. These three assumptions often flip the answer.
7. If your down payment is under 20%, check the PMI settings so PMI stops when your loan-to-value (LTV) reaches the removal threshold.
8. If you turn on the tax benefit, fill in the marginal tax rate and any SALT cap settings, then remember this is a simplified estimate, not tax advice.
9. Click Calculate to see which choice is cheaper over your timeline, your break-even year (or N/A), and the year-by-year table.
10. Use the sensitivity check to see how the break-even time changes under low/base/high assumptions, so you know if your result is fragile.

Definitions

Time horizon: How long you will live there before moving (and selling if you buy).

Total net cost: Money that leaves your pocket over the whole period, minus money you get back at the end (like a returned deposit or sale proceeds).

Break-even time: The earliest year when buying has cost the same as renting, or less.

Equity: Home value minus the remaining mortgage balance. It is not cash until you sell or borrow against it.

Closing costs: One-time fees paid when buying (and later when selling), separate from the home price.

PMI: Private Mortgage Insurance, an extra monthly cost that often applies when your down payment is under 20%.

Loan-to-value (LTV): Remaining loan balance divided by home value, shown as a percent. Lower is better.

Opportunity cost (investing): What your cash could have earned if it was invested instead of used for housing costs.

Rent growth and home price growth: How fast rent or home value changes over time. These can be negative if you expect prices to fall.

Methodology

What this calculator compares

We compare two paths over your chosen number of years: (1) renting and paying rent-related costs and (2) buying and paying mortgage-related and owner-related costs, then selling at the end. The main output is total net cost for each path, plus the difference (buying minus renting) and a break-even year.

Timeline and monthly loop

We convert your years to months (months = years * 12). Then we run a month-by-month calculation so the model can handle changing rent, changing home value, and PMI stopping when it is no longer needed.

Rent path cash flows

Each month, the rent payment grows smoothly using your annual rent increase. We add renter's insurance if entered. If you enter a security deposit, we count it as money paid at the start, and we add back the amount you expect to get back at the end (deposit minus the loss percent).

Buy path cash flows

Upfront, we include down payment plus buyer closing costs (a percent of purchase price). Each month, we add: mortgage principal-and-interest payment, property tax (based on that months estimated home value), homeowners insurance, HOA dues, repairs and maintenance (a percent of home value), and extra utilities (only the extra amount compared to renting). The home value changes each month using your annual home price growth.

Mortgage payment and remaining balance

We compute a fixed monthly mortgage payment using the standard fixed-rate mortgage formula. Then we update the loan balance each month by splitting the payment into interest (balance times monthly rate) and principal (payment minus interest). If the mortgage rate is 0%, we use a simple zero-interest paydown to avoid divide-by-zero.

PMI rule (only when down payment is under 20%)

If your down payment percent is under 20%, we add monthly PMI using your PMI rate (percent of original loan per year). We stop PMI once the loan-to-value (current balance divided by current home value) reaches your removal threshold (for example, 80% LTV).

Selling at the end

At the end of your horizon, we estimate the sale price from the final home value. We subtract selling costs (a percent of sale price) and subtract the remaining mortgage balance. The result is net proceeds from sale. If net proceeds are negative, that means you would need to bring cash to sell, and we keep it negative (we do not force it to zero).

Optional opportunity cost (investment return)

If you enter an investment return, we track a simple invest account in the background to reflect opportunity cost. It starts with the cash you would have tied up to buy (down payment plus buyer closing costs). Each month it grows by the monthly investment return, and we add the monthly difference between owner outflows and renter outflows (because if owning costs more that month, a renter could invest that extra cash, and if owning costs less, a renter would invest less). At the end, we apply this adjustment to the rent-side total so the comparison reflects what the renter could have invested instead.

Optional simplified tax benefit

If you turn on the tax benefit, we estimate a yearly tax savings from deductible mortgage interest plus deductible property tax, multiplied by your marginal tax rate. If you enable the SALT cap, we cap the deductible property tax at your entered cap amount. This is a simplified estimate and may not match your real tax return.

Year-by-year table and break-even

We store cumulative totals at the end of each year for both paths and show them in a table. Break-even year is the earliest year where cumulative buying cost is less than or equal to cumulative renting cost. If that never happens within your horizon, we show N/A.

Sensitivity check (low/base/high)

We compute break-even time three times: low, base, and high. We vary three key assumptions together: home price growth, rent growth, and investment return. The sensitivity output reports the break-even range across those three runs. If the range is wide or includes N/A, the decision depends heavily on your assumptions, so double-check them using credible data for your area (for example, home price indexes [1] and rent measures [3]).

Input validation and safety

We block calculation with clear errors if required inputs are blank or out of range (for example: years must be greater than 0, down payment percent must be between 0 and 100). Percent inputs that are required for selected options cannot be blank. Money fields accept commas. We also handle special cases like 0% mortgage rates without dividing by zero.

Sources