Free Buy vs Rent Calculator

Compare the true cost of buying versus renting over your planned time horizon. Accounts for mortgage interest, property tax, insurance, maintenance, home appreciation, rent increases, and the opportunity cost of investing the down payment.

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Return you'd earn investing the down payment and any monthly savings in index funds.

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Enter your details on the left, then press Calculate.

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What is this calculator for?

You're paying $2,400/month in rent. The mortgage on a comparable house in your neighborhood would be $2,700/month, but everyone keeps telling you "rent is throwing money away" and "you should be building equity." Maybe. Or maybe the math actually favors renting in your specific city, at your specific time horizon, at current interest rates. The buy vs rent calculator is the only honest way to settle it.

The popular framing — "rent is wasted, buy is investing" — is wrong in roughly half the country roughly half the time. Buying involves substantial costs renters never see: closing costs (2-5% of the loan amount up front), property taxes (0.3-2.5% of home value per year), insurance, maintenance (industry standard estimate: 1% of home value per year — for a $400K house, $4,000/year), HOA fees in many neighborhoods, mortgage interest (the single largest cost on a 30-year mortgage), and the opportunity cost of having your down payment locked up instead of invested in stocks. Renters pay rent and renters' insurance and nothing else.

This calculator runs both scenarios over your planned time horizon and tells you which costs less in total net dollars. It accounts for mortgage interest, property tax, insurance, maintenance, and PMI on the buy side; rent and rent increases on the rent side; home appreciation on the buy side; investment returns on the down payment on the rent side. The output is your break-even year — how long you'd need to live in the house to come out ahead of renting and investing the difference.

How to use this calculator

Enter the home purchase price at the realistic offer price for the house you'd actually buy. Don't use an aspirational target; use what comparable houses are closing at in your neighborhood. Zillow's "Zestimate" is rough; recent closed sales from your county assessor or Redfin's sold-property data are far more accurate.

Set the down payment percentage — 20% is conventional and avoids PMI; 5-10% is common for first-time buyers with FHA or low-down conventional loans; under 5% triggers higher rates and mandatory PMI of 0.5-1% of loan balance per year. The mortgage rate should be the current 30-year or 15-year rate from a real lender quote, not the headline national average. As of late 2024, 30-year rates averaged 6.5-7.5% depending on credit score, down payment, and lender.

Monthly rent is what you currently pay or what comparable units in the neighborhood charge. Annual rent increase is locality-dependent: 2-3% is average in stable markets; 5-8% in hot markets (Austin, Phoenix, Boise during 2020-2022); under 2% in some Midwest and Southeast secondary markets. Home appreciation follows the long-run US average of about 3-4% nominally, but specific regions vary hugely: coastal California has averaged 6-8%, Detroit and Cleveland under 2%.

The deal-breaker inputs are property tax rate (look up your county's effective rate — it ranges from 0.3% in Hawaii and Alabama to 2.5% in New Jersey and Illinois), home insurance (highly variable — $1,000-1,500 in low-risk states, $3,000+ in Florida and California due to hurricane and wildfire exposure), and maintenance (industry rule of thumb: 1% of home value annually for ongoing repairs and major capital expenses amortized).

Investment return is the rate you'd earn on the down payment and monthly savings if you rented instead. Most planners use 6-7% nominal for a stock-heavy portfolio. Don't model 0% — that's not realistic for someone making a financially-sophisticated buy-vs-rent decision. Time horizon is how long you'd actually live in the house. National median is 8 years; people who buy and sell within 5 years rarely come out ahead of renting.

Understanding your results

The calculator returns the cumulative net cost of buying versus renting over your time horizon, plus the break-even year — the year at which buying overtakes renting in total cost. Below the break-even, renting wins; above it, buying wins.

Reading the result: if the break-even is 8 years and you plan to live there 10, buying wins by a modest margin. If the break-even is 14 years and you plan to live there 5, renting wins dramatically. If the break-even is "never within your horizon," the math is telling you that at current rates and prices, this specific buy doesn't pencil out for you — you're financially better off renting and investing the difference.

The most common surprises in calculator results: (1) High-interest-rate periods (like 2023-2025 with 6.5-7.5% mortgage rates) push break-even years out by 2-4 years compared to low-rate periods (2020-2021 with 3% rates). The same house at 7% versus 3% has a much harder time beating rent + invest. (2) High-property-tax states (NJ, IL, TX, NH) push break-even by 1-2 more years versus low-tax states (HI, AL, CO, LA). (3) The opportunity cost of the down payment is the variable most people ignore — if you'd otherwise put $80,000 in an index fund earning 7%, that fund grows to $315,000 over 20 years even with no additional contributions, which has to be netted against home equity to make the comparison fair.

The qualitative factors the calculator can't capture: stability (a 30-year mortgage locks your housing payment; rents are uncertain), flexibility (renting is far cheaper to exit than owning), control (owners can renovate; renters cannot), risk concentration (homeownership is a leveraged bet on one neighborhood — a job change requiring relocation can force a sale at a bad time). The calculator is the financial answer. The full decision incorporates life-stage factors too: a couple planning to have kids in 3 years and stay in the same school district for 15 may rationally buy even when the math says rent; a freelancer who might take a remote contract in another country may rationally rent even when math says buy.

A worked example

Anika and Raj are 33 and 35, household income $215,000, currently paying $3,100/month rent in Austin for a 2-bedroom. They have $90,000 in savings earmarked for a down payment. The market: a comparable 3-bedroom house lists at $545,000, with current 30-year rates at 6.875%, Texas property tax around 1.9%, and home insurance about $2,800/year (Texas hail and wind exposure). They expect to live in Austin for 7 years before potentially moving for family reasons.

Scenario A: Buy at $545,000, 16% down ($87,200), finance $457,800 at 6.875%, 30-year. Monthly P&I: $3,008. Property tax: $863/month ($10,355/year). Insurance: $233/month. PMI (down payment under 20%): $191/month. Maintenance (1% annually): $454/month. Total monthly carrying cost: $4,749. They forfeit the investment return on the $87,200 down payment plus closing costs (about $14,000), totaling $101,200 of capital deployed.

Scenario B: Continue renting at $3,100/month, with 4% annual rent increases. Invest the $101,200 they would have used for buying at 7% return. Invest the monthly difference between buying-cost and rent ($4,749 - $3,100 = $1,649/month) at 7%.

The calculator runs both for 7 years. Buy: cumulative housing cost minus home equity at sale minus realized appreciation = net cost $145,000. Rent: cumulative rent paid minus investment gain on down payment and monthly savings = net cost $158,000. Buy wins by $13,000 over 7 years — about $1,857/year. Marginal but real.

Now they run a 5-year scenario instead. Buy: net cost $128,000. Rent: net cost $116,000. Rent wins by $12,000 over 5 years. The break-even is around year 6.5. If they're confident they'll stay 7+ years, buy. If they think 5 years is the realistic horizon, rent. The decision swings on time horizon more than on any other variable.

They also model a sensitivity: what if Austin home prices flatten or drop 5% over the next 3 years (a plausible scenario for an overheated market)? Buy net cost over 7 years jumps to $182,000 — rent wins by $24,000. The downside scenario punishes buy more than the upside rewards it, because leverage cuts both ways. They decide to wait 12 months, watch the market, and re-run the calculator if rates or prices shift meaningfully.

Related resources

For mortgage-payment math underlying the buy side, see Mortgage Calculator and Loan Amortization. For evaluating whether you qualify for the mortgage at all, the DTI Ratio Calculator. For rent affordability questions (what monthly rent fits your income), Rent Affordability Calculator. For long-horizon investment math underlying the "invest the difference" side of the analysis, the Compound Interest Calculator. The New York Times buy-vs-rent calculator is the most-cited independent version of this analysis, with similar inputs and methodology.

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Frequently asked questions

What is the 5% rule for buying vs renting?

Personal finance writer Ben Felix's 5% rule: estimate annual ownership cost as 5% of home value (1% property tax + 1% maintenance + 3% opportunity cost of equity). Divide by 12 to get the equivalent monthly rent. If actual rent in your market is lower than that figure, renting and investing the difference often wins. If rent exceeds 5%/12 of home value, buying tends to win. This calculator runs the full simulation, but the 5% rule is a useful sanity check.

How does time horizon matter?

Buying has high upfront costs (down payment, closing costs of 2-5%, moving, sometimes PMI) that you only recoup through years of appreciation and amortization. Most simulations find the break-even at 5-7 years; under 5 years, transaction costs and the lower mortgage-principal-paid window mean renting usually wins financially. Above 10 years, buying tends to dominate unless your local appreciation rate is very low.

What if home prices drop?

Set the home-appreciation input to a negative number (e.g., -1% or -2%) to model declining markets. Renters benefit when home prices fall because they didn't tie up capital in a depreciating asset and can reinvest at lower prices later. Historically, U.S. home values have averaged about 3-4% nominal growth long-term, though regional and decadal variation is substantial.

When does buying always make sense?

When all of these align: you'll stay 7+ years with confidence, you can put 20% down to avoid PMI, the current mortgage rate is comparable to the long-run historical average (5-6%), the home market in your city has been appreciating at or above the rate of inflation, and you have stable income and 6+ months of emergency fund. With those conditions met, the calculator almost always favors buying. The 7+ year horizon is the single most important variable — most people who lose money on real estate sold within 5 years for life reasons (job, divorce, kids) rather than market reasons.

When does renting always make sense?

When all of these align: you're likely to move within 3-4 years for career or life reasons, you don't have 20% down (PMI eats into the math), current mortgage rates are at multi-decade highs, your city has a price-to-rent ratio above 20 (homes cost more than 20 years of equivalent rent), your job is volatile (commission-only, contract, startup equity-heavy), or you'd otherwise invest the down payment in a high-return asset class. Tech workers in San Francisco and New York in their 20s and early 30s are textbook rent-while-investing candidates — the math almost always favors renting in those markets due to price-to-rent ratios above 25 and high career mobility.

What's the price-to-rent ratio and how should I use it?

P/R ratio is the home's purchase price divided by the annual rent for an equivalent property. P/R below 15 strongly favors buying. P/R 15-20 is balanced — calculator decides. P/R above 20 favors renting. Major US cities as of 2024: San Francisco ~38, NYC ~28, Los Angeles ~27, Seattle ~22, Austin ~21, Boston ~21, Denver ~19, Chicago ~14, Houston ~12, Dallas ~12, Cleveland ~9. The Midwest and parts of the South have favorable P/R ratios. Coastal cities have unfavorable P/R ratios that mathematically favor renting even after accounting for appreciation.

Does mortgage interest deduction make a big difference?

Less than it used to, post-2017 tax reform. The standard deduction was nearly doubled (currently $14,600 single, $29,200 married joint for 2024), so only homeowners with itemized deductions exceeding those thresholds get any benefit. For a 6.875% mortgage on $457,000, year-one interest is about $31,000 — significant. But add state/local tax (capped at $10,000) and charitable contributions, and you're often itemizing $25-35K total. Net tax benefit: maybe $2,000-4,000 per year for households in the 22-24% federal bracket. Material but not the deal-maker it was pre-2018.

How does the calculator handle home appreciation versus stock returns?

It nets both. On the buy side, home value grows at your assumed appreciation rate (typically 3-4% national average, region-dependent), and that growth offsets your costs at sale. On the rent side, the down payment and monthly savings grow at your assumed investment return rate (typically 7% nominal for stock-heavy portfolios) and that growth offsets the rent you paid. The math is mathematically symmetric — both sides get to grow their capital — and the comparison comes down to which growth rate dominates and how the costs along the way (mortgage interest, taxes, maintenance versus rent) net out. The break-even year is when the buy advantage (appreciation + equity) overtakes the rent advantage (lower carrying cost + invested savings growth).

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