Rent vs buy calculator

Buying usually has large upfront costs (down payment and closing fees) while renting has lower move-in costs. Over time, rent typically rises and mortgage principal builds equity. The breakeven point is when the average monthly cost of buying (spread over your stay) is no longer higher than renting.

If you plan to move before breakeven, renting is often cheaper on a pure cash basis. If you stay longer, buying can win — especially when home appreciation and equity matter to your plan.

Renting often wins on cash flow in the first few years because buying front-loads closing costs, PMI (when down payment is under 20%), and early mortgage payments that are mostly interest. If your planned stay is shorter than the breakeven horizon, average monthly buying cost usually stays above renting.

Renting can also make sense when you need mobility (job moves, uncertain timeline), when local prices are very high relative to rent, or when you would rather invest your down payment elsewhere — turn on opportunity cost in advanced settings to model that tradeoff.

Renting is not “throwing money away”: you pay for housing services and flexibility. Buying builds equity only after you stay long enough to offset transaction costs — which is exactly what the breakeven line estimates.

The 5% rule is a quick mental model: add about 5% of the home’s value per year to approximate annual ownership cost (often split as ~1% maintenance, ~1% property tax, ~3% cost of capital / opportunity cost). Compare that annual figure to 12 months of rent.

If annual rent is well below 5% of price, renting may be cheaper in the short run; if rent is near or above 5%, buying deserves a full calculator pass. This rule ignores your actual mortgage rate, tax bracket, and local market — use the calculator above for your numbers.

Many people search for a rent vs buy calculator with investment or “invest the difference” logic. In advanced settings, enable opportunity cost and set an average investment return (AIR). The model adds the foregone return on your down payment and buy-side cash to the cost of owning, and credits rent-side cash you could invest instead.

Higher assumed returns usually extend the breakeven (buying looks worse vs investing). This is a simplified model — not a portfolio forecast. For compound growth without housing, see our compound interest calculator.

The calculator’s US median ($400k home) preset uses a $400,000 price, $80,000 down (20%), a 6.5% 30-year mortgage, $2,400/month rent, and typical tax, insurance, and maintenance inputs. With opportunity cost off (advanced panel), breakeven is about 4 years — buying’s average monthly cost drops below renting after that horizon.

If you change How long will you stay? to 2 years, the tool typically recommends renting because upfront buying costs have not amortized. Turn on opportunity cost in advanced settings to model investing your down payment — breakeven moves later. Online calculators differ by assumptions; compare methodology, not just headline years.

This tool does not pull live rent vs buy by location or ZIP-level Zillow data (no market API in v1). You can still model your market — including searches like rent vs buy calculator California or other states — by entering local monthly rent, property tax, insurance, and appreciation that match your city or county assessor figures.

National “rent vs buy 2026” headlines hide wide regional spreads — high-cost metros often have longer breakeven horizons than areas where rent is cheap relative to prices. Re-run the calculator whenever you change cities or loan quotes.

Stability, control over renovations, school districts, and commute also matter. A shorter breakeven does not mean buying is right if you need flexibility — and a longer breakeven does not rule out buying if you value ownership for non-financial reasons.