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Compare the true financial cost of renting versus buying a home over a chosen time period. This calculator factors in mortgage payments, property taxes, maintenance, insurance, closing costs, home appreciation, rent increases, and the opportunity cost of investing your down payment elsewhere. Find the break-even point where buying becomes cheaper.
Recommendation
Buying is cheaper
Break-Even Year
Year 6
Total Rent Cost
$275,133.1
Home Equity
$292,955.9
| Year | Rent Net Cost | Buy Net Cost | Home Equity | Advantage |
|---|---|---|---|---|
| 1 | $17,560 | $28,994.69 | $97,576.72 | Rent +$11,434.69 |
| 2 | $35,389.2 | $45,567.84 | $115,882.98 | Rent +$10,178.64 |
| 3 | $53,477.64 | $61,697.04 | $134,951.98 | Rent +$8,219.4 |
| 4 | $71,813.82 | $77,358.58 | $154,818.57 | Rent +$5,544.76 |
| 5 | $90,384.5 | $92,527.37 | $175,519.39 | Rent +$2,142.87 |
| 6 | $109,174.64 | $107,176.86 | $197,092.96 | Buy +$1,997.79 |
| 7 | $128,167.2 | $121,278.95 | $219,579.72 | Buy +$6,888.25 |
| 8 | $147,342.94 | $134,803.89 | $243,022.25 | Buy +$12,539.04 |
| 9 | $166,680.3 | $147,720.19 | $267,465.28 | Buy +$18,960.11 |
| 10 | $186,155.18 | $159,994.48 | $292,955.9 | Buy +$26,160.7 |
The real cost of buying includes not just your mortgage payment, but property taxes (typically 0.5–2.5% of home value annually), maintenance (1% average), homeowner insurance, and closing costs. In return, you build equity as your home appreciates and mortgage principal is paid down. When renting, your down payment and closing costs can be invested instead. At a 7% average market return, this opportunity cost is significant. However, rent typically increases 3–5% per year, while a fixed-rate mortgage payment stays constant.
The break-even year is when the net cost of buying (total spent minus home equity) becomes less than the net cost of renting (total rent minus investment gains on down payment). For most scenarios, this occurs between years 4 and 8. If you plan to move sooner, renting is often cheaper.
This model uses fixed annual rates for appreciation, rent increases, and investment returns. Real-world values fluctuate. Tax deductions (mortgage interest, property tax) are not included for simplicity — they would favor buying slightly more. Transaction costs of selling (5–6% agent fees) are also excluded.
It depends on your timeline, location, and opportunity cost. Buying includes mortgage, property tax, maintenance, and insurance; renting avoids those but rent typically rises 3–5% yearly. For most scenarios the break-even point (when buying becomes cheaper in net cost) falls between years 4 and 8. If you plan to move sooner, renting is often cheaper. Use this calculator with your numbers to compare total cost over your planned horizon.
The break-even year is when the net cost of buying (total spent minus home equity) drops below the net cost of renting (total rent minus investment gains on your down payment). The calculator factors in mortgage payments, property tax (e.g. 0.5–2.5% of value), maintenance (e.g. 1%), insurance, closing costs, home appreciation, rent increases, and a 7% investment return on the down payment. Enter your assumptions to see your break-even year.
If you invest the down payment at a 7% average return instead of buying, that opportunity cost is built into the rent-vs-buy comparison. In high-appreciation markets or with a long stay, buying often wins; in low-appreciation areas or if you move in a few years, renting and investing the difference can come out ahead. Run both scenarios in the calculator with your home price, rent, and investment return assumption.
Rent typically increases 3–5% per year, so the cost of renting grows over time. A fixed-rate mortgage payment stays constant, which makes buying relatively more attractive the longer you stay. The calculator uses an annual rent increase rate you specify; higher rent growth makes buying look better sooner. Try different rates to see how sensitive the break-even point is.
Usually between years 4 and 8, depending on down payment, mortgage rate, property tax, maintenance, rent level, rent growth, and investment return on the down payment. The calculator shows a year-by-year comparison and identifies the break-even year when the net cost of buying falls below renting. If you plan to move before that year, renting is often the cheaper option.
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