Compare owning and renting over time, including appreciation, selling costs, investment returns on your cash, and your breakeven year.
"Investment return" is what your cash could earn if you rent instead. The calculator invests your down payment, closing costs, and any monthly savings from renting, so the comparison is fair.
A fair rent vs. buy comparison has to look at your total financial position, not just the monthly payment. This calculator follows both paths month by month and compares your net worth at the end of the period you plan to stay.
The breakeven point is the first year when buying leaves you with more net worth than renting. Move out before that year and renting was likely the better deal financially. If the calculator shows "Beyond 30 years," renting wins under your assumptions across the whole period.
Many simple calculators compare only the mortgage interest and other costs of owning with the rent you would pay. That leaves out a key fact: if owning costs more each month than renting, a renter has extra cash to invest every month. In the default example, owning costs about $2,856 a month in the first year (mortgage $2,022.62, property tax $366.67, insurance $133.33, and maintenance $333.33), compared with $2,000 of rent. That gap of roughly $856 a month adds up over time, so it belongs in the comparison.
With the default numbers above, a $400,000 home with 20% down, a 6.5% mortgage rate, and $2,000 in monthly rent, the renter starts with $92,000 to invest: the $80,000 down payment plus $12,000 in closing costs. After 7 years the buyer's home equity is about $173,100, while the renter's portfolio has grown to about $227,500, so renting comes out ahead by roughly $54,400. After 10 years renting leads by about $65,000, and after 30 years the buyer has about $912,700 in equity against a portfolio of about $1,135,400. In this example the breakeven point is beyond 30 years.
That result reflects the default assumptions: a home price about 16.7 times the annual rent, 3% appreciation, and a 7% investment return. Change any of them and the answer can flip, which is why testing a range matters.
Starting from the default example and changing one assumption at a time gives a sense of how sensitive the answer is:
In short, buying wins when rent is high relative to home prices, when homes appreciate well, or when you stay long enough for those effects to build up.
A quick way to gauge your market is the price-to-rent ratio: the home price divided by a year of rent for a similar home. In the default example it is $400,000 divided by $24,000, or about 16.7. A commonly cited rule of thumb is that lower ratios, roughly below 15, tend to favor buying, while ratios above 20 tend to favor renting. In between, the details of your situation decide. The calculator gives you a more precise answer than the ratio alone.
If you're leaning toward buying, check the House Affordability Calculator to confirm the price fits your budget, and the DTI Calculator to see how it affects your loan approval odds. If you're carrying other debt, our article on paying off debt before buying a house can help you decide what to tackle first. To see what a specific home would cost each month, including tax, insurance, and PMI, use the Mortgage Calculator.
If you decide buying makes sense, the guide on how much house you can afford walks through the income, debt, down payment and interest rate numbers step by step.
Does this include selling costs if I move?
Yes. The "Selling costs" field, set to 6% by default, is subtracted from your home equity whenever you sell, so short stays are penalized appropriately. Typical costs, including agent commissions and closing costs, often fall in the 6-8% range, so adjust it for your market.
What if I already have the down payment sitting in cash?
The comparison still holds. The "investment return" reflects what that cash could earn elsewhere if you didn't put it into a home, regardless of whether you're borrowing it or already have it saved.
Why does a longer stay usually favor buying?
Upfront costs like closing costs and selling costs are one-time, so they are spread over more years the longer you stay, while rent keeps recurring and growing every year. Equity and appreciation also compound over time, which tends to tip the math toward buying the longer you're in the home.
Does this account for tax deductions on mortgage interest?
No, this calculator doesn't model tax deductions, since eligibility and value vary a lot by country, income level, and whether you itemize deductions at all. If mortgage interest deductions apply to your situation, buying would look somewhat better than what's shown here. Investment gains are also shown before any tax.
What happens if home prices fall instead of rising?
Try setting the appreciation field to zero or a negative number to see how much that changes your breakeven point. Falling prices hurt buying's side of the comparison directly, since your equity grows more slowly or shrinks, and the mortgage still has to be repaid.
Should I use my actual local rent or a national average?
Always use your actual numbers if you have them. Rent, home prices, and appreciation rates vary enormously by city and neighborhood, so a national average could give a breakeven point that's off by years in either direction for your specific market.
Why does the calculator assume I invest the monthly difference?
Because otherwise the comparison would be unfair. If owning costs more each month than renting, a renter keeps that extra money, and a fair comparison assumes it is put to work rather than spent. If you know you would spend it instead, the results tilt toward buying, since owning acts as a forced savings plan.
What is a good price-to-rent ratio?
Dividing the home price by a full year of rent gives the ratio. Many analysts treat ratios below about 15 as favorable to buying and ratios above about 20 as favorable to renting, but these are rough guides. Interest rates, appreciation, and how long you plan to stay all change the answer, which is why this calculator runs the full comparison.