Compare the true cost of renting and buying — including closing costs, maintenance, equity, and what your down payment could earn instead.
A long-term planning model, not a prediction. It assumes constant property taxes, insurance, HOA, and maintenance; annual rent and home-price growth; and a steady investment return. It excludes mortgage-interest and property-tax deductions, capital-gains exclusions, transaction timing, and local market differences. Actual results vary.
At these assumptions, buying pulls ahead of renting in year 13. Over 10 years, renting is $19,286 cheaper.
Net cost subtracts the sale proceeds (owner) and investment gains (renter) from what each path spends. Bars show net cost at your 10-year horizon — shorter is better.
| Year | Home value | Mortgage | Net sale proceeds | Buy net cost | Rent net cost | Cheaper |
|---|---|---|---|---|---|---|
| 1 | $463,500 | $355,976 | $79,714 | $62,342 | $21,277 | Rent |
| 2 | $477,405 | $351,683 | $97,078 | $83,533 | $42,367 | Rent |
| 3 | $491,727 | $347,102 | $115,121 | $104,045 | $63,286 | Rent |
| 4 | $506,479 | $342,214 | $133,876 | $123,846 | $84,049 | Rent |
| 5 | $521,673 | $337,000 | $153,373 | $142,903 | $104,674 | Rent |
| 6 | $537,324 | $331,435 | $173,649 | $161,183 | $125,180 | Rent |
| 7 | $553,443 | $325,498 | $194,738 | $178,649 | $145,589 | Rent |
| 8 | $570,047 | $319,164 | $216,680 | $195,263 | $165,925 | Rent |
| 9 | $587,148 | $312,405 | $239,514 | $210,984 | $186,214 | Rent |
| 10 | $604,762 | $305,194 | $263,283 | $225,771 | $206,485 | Rent |
Both paths start with the same cash. The renter invests the down payment and closing costs that the buyer spends, plus any month where renting is cheaper than owning. That is why the renter's line can stay below the buyer's for years even while rent rises.
A $450,000 home with 20% down at 6.5% over 30 years. Rent starts at $2,300 a month, grows 3% a year, and the buyer stays 10 years. Home prices grow 3% a year; investments earn 6%.
| Item | Treatment | Why it matters |
|---|---|---|
| Closing costs | Included (default 3% buying, 6% selling) | They are sunk immediately and must be recovered before buying breaks even. |
| Maintenance | Included (default 1% of price per year) | Owners pay for repairs that renters never see as a separate line. |
| PMI | Included while the down payment is under 20% | The insurance protects the lender, not you, and can add hundreds per month. |
| Mortgage interest deduction | Excluded | The standard deduction and the SALT cap mean many owners get little or no benefit. |
| Investment return | Applied to the renter’s down payment and monthly savings | This opportunity cost is the single biggest reason renting can win for short stays. |
| Inflation | Rent and home values grow; other costs held flat | A simplifying assumption. Insurance, taxes, and maintenance usually rise too. |
| Local market | One national-style set of assumptions | Supply, taxes, and appreciation vary enormously by metro — treat the output as a scenario. |
Change one assumption at a time and watch the break-even year move. The verdict is only as good as the inputs, especially appreciation, investment return, and how long you stay.
Compare renting and buying with closing costs, maintenance, PMI, equity, and investment returns. See your break-even year and net cost over time. Free.
Most rent-versus-buy debates compare a mortgage payment with a rent check and stop there. This calculator compares the full cash picture over a chosen horizon. On the buying side it includes the down payment, closing costs, principal and interest, property tax, homeowners insurance, HOA dues, maintenance, PMI when the down payment is under 20%, home appreciation, and selling costs at the end. On the renting side it includes rent that grows each year, renter insurance, and — crucially — the investment return on the cash a buyer would have spent. The result is a break-even year, a net cost for each path, and a chart showing how the gap changes over time. The default scenario models a $450,000 home with 20% down at 6.5%, rent of $2,300 growing 3% a year, and a 10-year stay.
Each month the mortgage amortizes on a 30-, 20-, or 15-year schedule, with PMI charged until the balance drops below 80% of the purchase price. Property tax, insurance, HOA, and maintenance are added to the ownership cost; rent grows annually at the rate you choose. Both paths start with the same cash: the buyer spends the down payment and closing costs, while the renter invests that same amount at the assumed return. In any month where owning costs more than renting, the renter invests the difference; in months where renting costs more, the buyer invests the difference. At the end of each year the model sells the home, pays the remaining mortgage and selling costs, and subtracts those proceeds from what the buyer spent. The renter’s net cost subtracts only the investment gains, not the contributions, so both figures measure consumption rather than savings.
Buying has large upfront and exit costs: closing costs at purchase and agent fees at sale can easily total 9% of the price. Those costs have to be recovered through appreciation and principal payments before owning pulls ahead. A short stay therefore favors renting almost regardless of the market; a long stay gives the owner time to amortize the transaction costs and build equity. Appreciation is the second lever: at 3% a year a home roughly doubles in 24 years, but at 1% it barely keeps pace with inflation. The investment return matters just as much on the renter side, because the down payment is a large sum that could be compounding elsewhere. A 10-year horizon with high investment returns and modest appreciation is the scenario where renting most often wins; a 20-year horizon with normal appreciation usually flips the result.
Owners routinely underestimate maintenance — roofs, HVAC, water heaters, and appliances arrive on their own schedule — and transaction costs at both ends of the purchase. Renters face annual increases that compound, less control over their living situation, and no equity, but they avoid repair bills and can move for a job without a six-figure asset to sell. The honest way to use this tool is as a scenario engine: run the base case, then stress-test it. Try appreciation at 1% instead of 3%, investment returns at 4% instead of 6%, and a horizon of 5 versus 15 years. If buying still wins across most reasonable assumptions and you plan to stay, the decision is robust. If the verdict flips on small changes, the decision is close enough that lifestyle and flexibility should decide. This is educational modeling, not financial advice; consult a lender and a tax professional for your specific situation.
The model simulates both paths year by year and compares their net costs. For the buyer, net cost is the down payment plus closing costs plus every ownership payment, minus net sale proceeds after selling costs and the mortgage payoff. For the renter, net cost is rent plus renter insurance, minus the investment gains on the cash that would have gone into the house. The first year the buyer’s net cost falls below the renter’s is the break-even year.
No. The model deliberately excludes it. Since the 2018 standard deduction increase and the $10,000 SALT cap, many homeowners receive little or no marginal benefit from itemizing mortgage interest and property taxes. The benefit depends on your filing status, other deductions, and state taxes. If you know your marginal benefit, treat it as a reduction in the monthly ownership cost and compare again.
No. Rent buys shelter, flexibility, and freedom from maintenance and transaction costs. The renter in this model also invests the down payment, closing costs, and any monthly savings, which is real wealth that does not appear in a rent check. Buying builds equity, but the first years are dominated by interest, closing costs, and maintenance. Which path wins depends mainly on how long you stay and what returns you assume.
The horizon, home appreciation, and investment return drive most of the result. A longer stay gives the buyer more time to amortize closing and selling costs; higher appreciation favors buying; higher investment returns favor renting. Small changes compound: a one-point difference in either growth rate can move break-even by years. Change one input at a time and watch the crossing point rather than trusting a single verdict.
A larger down payment lowers the loan, the monthly payment, and PMI, but it also ties up cash that could earn a return elsewhere. This calculator applies PMI automatically when the down payment is under 20% and removes it once the amortized balance falls below 80% of the purchase price. Compare 5%, 10%, and 20% scenarios; the best answer depends on your emergency fund, job stability, and local market.
Yes. It includes an annual maintenance allowance, defaulting to 1% of the home price, plus property tax, homeowners insurance, HOA dues, and PMI when applicable. These are silently large: on a $450,000 home, 1% maintenance is $4,500 a year, or $375 a month. Renters avoid these direct costs, though landlords recover them through rent over time.
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