Rent vs Buy Calculator
Compare the true cost of renting vs buying a home. Factor in mortgage, taxes, maintenance, insurance, and investment returns to find the break-even point.
Renting
Buying
Monthly Mortgage
$2,023
Total Monthly (Buy)
$2,906
Down Payment
$80,000
Break-Even Year
N/A
Total Rent Paid (10yr)
$275,133
Investment value: $285,438
Total Buy Cost (10yr)
$437,392
Home equity: $266,283
How to Use Rent vs Buy Calculator
- 1
Enter rent details
Enter your current monthly rent and expected annual rent increase.
- 2
Enter home details
Set the home price, down payment, mortgage rate, property tax, maintenance, and insurance.
- 3
Set comparison parameters
Choose the investment return rate and how many years to compare.
- 4
Analyze results
See the break-even year, total costs, and year-by-year comparison table.
Frequently Asked Questions
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The Rent vs Buy Question Is More Complicated Than You Think
The conventional wisdom — "renting is throwing money away" — is one of the most persistent financial myths. Renting is exchanging money for housing, just like buying is. The question is which exchange is more financially efficient given your specific situation. Canadian financial planner Ben Felix popularized a useful framework called the 5% rule: the annual cost of owning a home equals roughly 5% of the home's value — 1% for property tax, 1% for maintenance, and 3% for cost of capital (the return you give up by having money in home equity rather than invested). If you can rent the equivalent property for less than 5% of its value per year, renting is financially neutral or better.
On a $500,000 home, 5% is $25,000/year or about $2,083/month. If you can rent that home for $1,800/month, the financial case for renting is stronger than people realize. At $2,500/month rent, buying starts to look more favorable.
Hidden Costs That Tilt the Math
Most rent vs buy comparisons undercount the true cost of homeownership. Closing costs when buying run 2-5% of the purchase price — on a $400,000 home, that's $8,000-$20,000 upfront. Selling costs (agent commissions, fees) typically run 5-6% more. So just buying and selling a home costs roughly 8-11% of the purchase price before you've made a single mortgage payment. This is why the financial break-even for buying vs renting is typically 5-7 years — you need that long just to recoup transaction costs through equity building and appreciation.
The Opportunity Cost of the Down Payment
A 20% down payment on a $400,000 home is $80,000. That $80,000 invested in a diversified index fund at 7% real returns would grow to about $305,000 in 20 years. When comparing rent vs buy financially, you have to include this opportunity cost — the returns you're giving up by having money locked in home equity rather than in the market.
When Buying Clearly Makes Sense
Despite the complexity, there are situations where buying is clearly the right call: you plan to stay for 7+ years, you have stable income and job security, you value the stability and control of ownership, and local rent-to-price ratios are favorable. There's also a behavioral argument for homeownership — mortgage payments function as forced savings (building equity) for people who struggle to invest voluntarily. The "right" answer genuinely depends on your local market, your timeline, and your personal values around stability and flexibility.