Question 1

How does the rent vs buy calculator work?

Accepted Answer

The calculator compares the net cost of buying (mortgage payments, property tax, insurance, HOA, maintenance, minus equity built) against the cumulative cost of renting over 30 years. The break-even year is when the net cost of buying falls below the cumulative rent paid.

Question 2

What is the break-even year?

Accepted Answer

The break-even year is when the net cost of owning (all housing costs minus equity gained) equals what you would have paid in rent. Before break-even, renting may be cheaper on a net basis. After break-even, owning typically costs less in total when equity is considered.

Question 3

What is opportunity cost in this calculator?

Accepted Answer

The opportunity cost is what your down payment could earn if invested instead of used for a home purchase. The calculator shows the net cost of buying without subtracting this — include it mentally if you have a high expected investment return. Some calculators deduct this; this one keeps the analysis focused on direct housing costs.

Question 4

Is renting always throwing money away?

Accepted Answer

No. Renting provides flexibility, no maintenance costs, and no exposure to falling home values. Owning builds equity and provides stability, but also comes with property taxes, maintenance (typically 1-2% of value per year), and transaction costs on sale (5-6%). In high-cost markets, renting and investing the difference can outperform buying.

Question 5

What home appreciation rate should I use?

Accepted Answer

US home prices have appreciated roughly 3-4% annually over long periods, roughly in line with inflation. Some metro areas average higher, others lower. Be conservative — counting on above-average appreciation is speculative. The calculator lets you test different scenarios.

Question 6

What maintenance percentage should I use?

Accepted Answer

A common rule is 1-2% of home value per year for maintenance and repairs. Older homes or those in harsh climates may run higher. On a $400,000 home, 1% is $4,000/year. This is often underestimated by first-time buyers and can significantly affect the true cost of ownership.

Question 7

What is included in the cost to buy?

Accepted Answer

This calculator includes: monthly mortgage payments (P&I), property taxes, homeowners insurance, HOA fees, and ongoing maintenance. It subtracts equity built through mortgage principal paydown and home appreciation. Down payment is counted as an upfront cost.

Rent vs Buy Calculator

Buying

Renting

Cumulative cost over 30 years

Frequently asked questions