5–7 yrs
Typical break-even point for buying vs. renting
1–2%
Annual maintenance cost (% of home value)
3–4%
Long-run average US home appreciation rate
3%
Historical annual rent increase rate
What the rent vs. buy analysis includes
A proper comparison goes far beyond mortgage payment vs. rent. On the buying side: PITI payment, PMI, maintenance, HOA fees, transaction costs (typically 2–5% of purchase price to buy, 6–8% to sell), property tax, and the opportunity cost of your down payment. On the renting side: rent payments growing each year, and renter's insurance. The calculator computes the cumulative cost of each path year by year.
The break-even year is when total cumulative buying cost, net of equity and appreciation, crosses below total cumulative renting cost. Before that year, renting may be the financially superior choice. After it, buying typically wins. Location dramatically affects this calculation — high-cost cities with slow appreciation can have break-even points beyond 10 years.
How to use the rent vs. buy calculator
- Enter the home purchase price and your planned down payment
- Set the mortgage rate and current monthly rent
- Enter maintenance cost as a percentage (1% is a common default)
- Set home appreciation and annual rent increase assumptions
- Enter the opportunity cost rate — what you'd earn investing the down payment if you rented
- Review the year-by-year cumulative cost chart and the break-even year
Factors that favor buying
- Planning to stay 5+ years — transaction costs need time to amortize
- Strong local appreciation market
- Rapidly rising rents in your area
- Mortgage payment close to (or below) equivalent rent
- Strong desire for stability, customization, and a sense of ownership
Factors that favor renting
- Staying fewer than 3–5 years — transaction costs dominate
- High price-to-rent ratio in your market (home price ÷ annual rent > 20)
- Career uncertainty, possible relocation
- Down payment capital can earn a higher return invested elsewhere
- High maintenance costs on older homes or condos with deferred upkeep
ℹ️ The non-financial factors matter too
The calculator compares money, not life. Buying provides stability, community roots, the ability to make the space your own, and a forced savings mechanism. These factors have real value that doesn't show up in a spreadsheet — factor them into your decision alongside the financial analysis.
Common mistakes to avoid
- Comparing mortgage payment to rent without including taxes, insurance, and maintenance
- Ignoring transaction costs — selling a home typically costs 6–8% of the sale price
- Assuming all appreciation is pure profit — you still paid interest and maintenance for years
- Using optimistic appreciation assumptions — 5–6% real appreciation is historically unusual
- Not considering what the down payment would grow to if invested instead
Related calculators
Use the Mortgage Calculator to see your exact PITI for any purchase price. The Home Affordability Calculator confirms whether a purchase price fits your income. And the Net Worth Calculator shows how homeownership equity changes your overall financial picture over time.