Rent vs Buy Calculator
Buying
Renting
Common parameters
This calculator compares the total financial outcome of renting versus buying a home over a chosen time horizon. It accounts for mortgage payments, property taxes, maintenance, home value appreciation, and the opportunity cost of investing your down payment instead of spending it. The result shows the net cost of each option and when buying becomes cheaper than renting (break-even point).
Frequently Asked Questions
What is the break-even point?
The break-even point is the year at which the cumulative net cost of buying becomes equal to (and then lower than) renting. Before this point, renting is cheaper; after it, buying is. It typically ranges from 3 to 10 years depending on local real estate market conditions.
What is "investment return" in the renting scenario?
If you rent instead of buying, you don't spend your down payment on a property. This calculator assumes you invest that money at the specified annual return rate. This models the "opportunity cost" of tying up capital in a home purchase.
Why can "net cost to buy" be negative?
If home appreciation is high and you hold the property long enough, the equity gained can exceed all costs paid (mortgage, taxes, maintenance). In that case, buying generates a net positive return, shown as a negative net cost.
Does this calculator include transaction costs?
No — agent fees, closing costs, moving expenses, and renovations are not included. These typically add 5–10% to the purchase price and can significantly affect the break-even point. Factor them in manually for a more precise comparison.
What home appreciation rate should I use?
Historical real estate appreciation in most developed countries ranges from 2% to 5% per year on average. Use local market data for a more accurate estimate. In rapidly growing cities, it can be higher; in stagnant markets, it may be near zero.