Rent vs Buy Calculator

$400,000 Home vs $2,000/Month Rent — 7 Years

Over 7 years, buying the $400,000 home typically breaks even around year 5–6 vs renting at $2,000/month with 3% annual increases. After 7 years, buying generally produces a modest financial advantage due to equity building and home appreciation.

Should you rent or buy? This calculator compares the total financial cost of renting vs buying over your time horizon, accounting for mortgage payments, home appreciation, rent increases, and the opportunity cost of your down payment.

Mortgage is a 30-year fixed rate; term can be adjusted via the mortgage calculator
Property tax and maintenance (~1% of home value/year) are included in buying costs
Opportunity cost assumes the down payment could earn 7% annually if invested instead
Buying costs include 3% closing costs on purchase and 6% agent fees on sale
Does not account for mortgage interest tax deduction, which may favor buying for itemizers

How long do you need to stay for buying to make sense?

The general rule is 5+ years. Buying involves significant upfront costs (closing costs ~3%, agent fees ~6% on sale) that take years to recover through equity and appreciation. In high-appreciation markets, the break-even can be 3–4 years. In flat markets, it may be 7+ years.

Is renting just throwing money away?

No — this is a common myth. Rent buys you housing, flexibility, and freedom from maintenance costs. When you buy, you also "throw away" money on mortgage interest, property taxes, insurance, and maintenance. The real comparison is the total cost of each option, not just rent payments.

How much should I have saved before buying a home?

Beyond the down payment (ideally 20% to avoid PMI), budget for: 3–5% closing costs, 3–6 months emergency fund remaining after purchase, and $5,000–$15,000 for immediate repairs/improvements. Many buyers are "house poor" because they drain all savings on the down payment.

Rent vs Buy Comparison

Rent vs Buy Analysis