Rent vs Buy Calculator
Should you rent or buy a home? This free rent vs buy calculator compares the total cost of homeownership against renting over time, factoring in mortgage payments, home appreciation, property taxes, investment returns on your down payment, and more. See which option builds more wealth for your situation.
Buying Costs
Renting Costs
Net Worth Comparison Over Time
| Year | Home Value | Home Equity | Renter Investments | Total Spent Owning | Total Spent Renting | Winner |
|---|---|---|---|---|---|---|
| Year 5 | $476,377 | $176,822 | $171,945 | $256,183 | $127,419 | Buy +$5k |
| Year 10 | $567,338 | $296,054 | $288,559 | $441,117 | $275,133 | Buy +$7k |
| Year 15 | $675,667 | $443,478 | $438,290 | $636,471 | $446,374 | Buy +$5k |
| Year 20 | $804,681 | $626,552 | $632,875 | $844,237 | $644,889 | Rent +$6k |
| Year 30 | $1,141,315 | $1,141,315 | $1,271,925 | $1,306,931 | $1,141,810 | Rent +$131k |
Wealth Accumulation: Buy vs Rent
▶View All 30 Years
| Year | Home Equity | Renter Investments | Difference | Winner |
|---|---|---|---|---|
| 1 | $97,804 | $96,736 | $1,068 | Buy |
| 2 | $116,353 | $114,252 | $2,101 | Buy |
| 3 | $135,681 | $132,592 | $3,089 | Buy |
| 4 | $155,825 | $151,806 | $4,019 | Buy |
| 5 | $176,822 | $171,945 | $4,877 | Buy |
| 6 | $198,711 | $193,062 | $5,649 | Buy |
| 7 | $221,534 | $215,218 | $6,316 | Buy |
| 8 | $245,335 | $238,474 | $6,860 | Buy |
| 9 | $270,159 | $262,898 | $7,261 | Buy |
| 10 | $296,054 | $288,559 | $7,495 | Buy |
| 11 | $323,072 | $315,535 | $7,537 | Buy |
| 12 | $351,266 | $343,906 | $7,359 | Buy |
| 13 | $380,691 | $373,760 | $6,932 | Buy |
| 14 | $411,408 | $405,188 | $6,220 | Buy |
| 15 | $443,478 | $438,290 | $5,188 | Buy |
| 16 | $476,967 | $473,171 | $3,796 | Buy |
| 17 | $511,944 | $509,945 | $1,999 | Buy |
| 18 | $548,482 | $548,733 | $251 | Rent |
| 19 | $586,658 | $589,663 | $3,005 | Rent |
| 20 | $626,552 | $632,875 | $6,323 | Rent |
| 21 | $668,250 | $678,658 | $10,408 | Rent |
| 22 | $711,842 | $727,718 | $15,876 | Rent |
| 23 | $757,423 | $780,325 | $22,902 | Rent |
| 24 | $805,092 | $836,734 | $31,643 | Rent |
| 25 | $854,956 | $897,222 | $42,267 | Rent |
| 26 | $907,125 | $962,082 | $54,957 | Rent |
| 27 | $961,718 | $1,031,631 | $69,913 | Rent |
| 28 | $1,018,858 | $1,106,208 | $87,350 | Rent |
| 29 | $1,078,678 | $1,186,176 | $107,498 | Rent |
| 30 | $1,141,315 | $1,271,925 | $130,610 | Rent |
How to Decide: Rent vs Buy
The decision to rent or buy depends on your local market, timeline, and financial situation. According to the National Association of Realtors (NAR), you typically need to stay in a home for at least 5 to 7 years for buying to break even compared to renting, after accounting for closing costs, maintenance, and opportunity cost of your down payment.
The True Cost of Homeownership
When people ask “should I rent or buy,” they often compare only the mortgage payment to their monthly rent. But the real cost of owning a home goes far beyond the mortgage. Property taxes, homeowners insurance, maintenance (typically 1-2% of the home value per year according to the Urban Institute), HOA fees, and the opportunity cost of your down payment all factor into the equation. Our rent vs buy calculator accounts for all of these costs to give you an accurate comparison.
The Opportunity Cost of Your Down Payment
One of the most overlooked factors in the renting vs buying a home debate is what happens to your down payment money if you rent instead. A 20% down payment on a $400,000 home is $80,000. Invested in a diversified stock portfolio averaging 7% annual returns (based on historical S&P 500 data), that $80,000 could grow to roughly $157,000 in 10 years. If owning costs more per month than renting, a renter can invest the difference too, compounding the advantage. This is why renting can sometimes be the smarter financial move, especially in high cost-of-living areas where home prices are far above what rent would suggest.
When Buying Usually Wins
Buying tends to be the better financial choice when you plan to stay for at least 5-7 years, when your mortgage payment (including taxes and insurance) is close to or below equivalent rent, and when home appreciation in your area matches or exceeds the historical average of 3-4% per year (Source: S&P Case-Shiller Home Price Index). Low interest rates tilt the equation heavily toward buying. A homeowner with a 3% mortgage locked in during 2021 has a significant advantage over a renter facing 5-8% annual rent increases.
When Renting Usually Wins
Renting tends to win when you are in an expensive market where the price-to-rent ratio exceeds 20 (meaning it costs 20 times the annual rent to buy a comparable home), when you expect to move within 3-5 years, or when mortgage rates are high relative to expected home appreciation. Renting also provides flexibility and lower upfront costs, which can be valuable for people early in their careers or unsure about their long-term location.
Frequently Asked Questions
Is it cheaper to rent or buy a home?
It depends on your local market, how long you plan to stay, mortgage rates, and your opportunity cost of capital. In expensive markets with low rent-to-price ratios, renting and investing the difference can be financially superior. In affordable markets where monthly mortgage payments are close to rent, buying often wins within 5-7 years due to equity building and home appreciation. Use the calculator above to compare based on your exact numbers.
How long do you need to live in a home for buying to make sense?
Most financial experts suggest you need to live in a home for at least 5 to 7 years for buying to break even compared to renting. This accounts for closing costs (2-5% of the home price), the slow equity build in early mortgage years when most of your payment goes to interest, and potential selling costs of 5-6%. The exact breakeven point depends on your market, and this calculator shows you the exact year where buying overtakes renting in net worth.
What is the opportunity cost of a down payment?
The opportunity cost of a down payment is the investment return you forgo by tying up that money in a home instead of investing it. For example, an $80,000 down payment invested at a 7% annual return would grow to approximately $157,000 in 10 years. This rent vs buy calculator factors this in by comparing the renter's investment portfolio (including the down payment amount) against the homeowner's equity over time.
Already Decided to Buy?
Use our free amortization calculator to see your exact monthly payment, interest breakdown, and how extra payments can save you thousands.
Last updated: March 2026. This calculator is for educational purposes. Consult a financial advisor for advice tailored to your specific situation.