Reckonary / Finance / Rent vs buy
Buying is cheaper over 7 years, by
Over 7 years, buying comes out $32,235 cheaper — a total of $151,664 versus $183,899.
Cost to buyCost to rent
Buying pulls ahead in year 4 of 7. Before then renting costs less; after it, every year you own tilts the math further toward buying.
This is a scenario projection, not a guarantee. It assumes home value grows 3% a year and rent rises 3% a year — real markets don't move in a straight line. Change any assumption above to see how much the answer depends on it.
| Year | Buy (net) | Rent | Cheaper |
|---|---|---|---|
| 1 | $43,315 | $24,000 | Rent |
| 2 | $62,303 | $48,720 | Rent |
| 3 | $80,948 | $74,182 | Rent |
| 4 | $99,227 | $100,407 | Buy |
| 5 | $117,122 | $127,419 | Buy |
| 6 | $134,609 | $155,242 | Buy |
| 7 | $151,664 | $183,899 | Buy |
Buy figures are net of the equity you'd walk away with when selling. Same math, shown — change an assumption and every number moves with it.
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"Should I rent or buy?" doesn't have a universal answer — it has an answer for your price, your rent, your rate, and how long you plan to stay. This calculator lays the two paths side by side, adds up every real cost of each over the years you enter, and shows the year buying becomes the cheaper choice. Because the future is unknown, every assumption is an input you control, and the result is honestly a projection, not a promise.
Buying a home front-loads and back-loads big one-time costs: a down payment and closing costs when you buy, and selling fees when you leave. Renting has none of those — just a monthly payment. So in the early years, renting is almost always cheaper. Owning only wins once you've stayed long enough for equity and appreciation to outrun those transaction costs. The year that flips is your break-even point, and it's the single most important number in the decision. Stay past it and buying pays off; leave before it and you'd have kept more money renting.
A popular shortcut is the 5% rule: take the home's price, multiply by 5% — roughly 1% for property tax, 1% for maintenance, and 3% for the cost of tying up your money — and divide by twelve. If that monthly number is above your rent, renting is probably cheaper; if it's below, buying may come out ahead. On a $400,000 home that's about $1,667 a month, so paying $2,000 in rent hints that buying could win. It's a genuinely useful gut check. But it collapses everything into one ratio and ignores the two levers that matter most: how long you'll stay and what you assume for appreciation and rent growth. Use the rule to get oriented, then use the calculator above for a real answer.
The rent side is simpler: your monthly rent, rising each year at the rate you set, summed over the same window. Comparing the buy side's net cost against total rent is the honest apples-to-apples measure — it credits owners for the equity they build instead of treating a mortgage payment as money gone.
This is where a rent vs buy calculator earns or loses your trust. The answer hinges on numbers no one can know in advance — future home prices, future rents, future rates. Rather than bury a guess and hand you a confident-looking total, we put every assumption on a slider: appreciation, rent growth, mortgage rate, property tax, maintenance, and an optional setting for what your down payment could earn if invested instead. The most valuable thing you can do is move them. If a modest change in appreciation or in how long you stay flips the result, your decision is genuinely close, and things this math can't capture — job stability, whether you want the freedom to move, how much you'd enjoy owning — should carry the weight.
The opportunity-cost slider (off by default) captures the biggest of the missing pieces — the growth your down payment forgoes by sitting in a house — so you can turn it on when you want the fuller picture.
Is it cheaper to rent or buy?
It depends on how long you stay and on a handful of assumptions — the mortgage rate, how fast the home appreciates, how fast rent rises, and the taxes and upkeep of owning. Buying carries big one-time costs at both ends (down payment, closing, and selling fees), so it usually loses over a short stay and wins over a long one. This calculator adds all of it up for your numbers and tells you which is cheaper over the exact window you enter.
What is the break-even point in a rent vs buy decision?
It's the first year the running total cost of owning drops to or below the running total cost of renting. Before that year, renting has cost you less; after it, every additional year you own tilts the math further toward buying. A common rule of thumb is that buying starts to pay off somewhere around five years, but the real break-even depends entirely on your price, rate, rent, and local costs — which is why we compute it year by year instead of quoting a single number.
Does this calculator include maintenance and other ownership costs?
Yes. The buy side includes your down payment, principal and interest, property tax, homeowners insurance, and maintenance (set as a percent of the home's value each year, since upkeep rises as the home does). It also subtracts the equity you'd walk away with when you sell — the home's appreciated value minus your remaining loan balance minus selling costs. Renting is just the rent, rising each year at the rate you set.
What is the 5% rule for renting vs buying?
It's a quick sanity check: multiply the home's price by 5% (roughly 1% property tax, 1% maintenance, and 3% cost of capital), then divide by 12. If that monthly figure is more than your rent, renting is likely cheaper; if it's less, buying may win. It's a useful gut check, but it hides the details this calculator makes explicit — your actual rate, appreciation, and how long you'll stay. Use the rule to get oriented, then use the calculator for your real numbers.
How accurate is a rent vs buy calculator?
It's only as accurate as its assumptions, and no one can know future home prices, rents, or rates for certain. That's why this tool is honest about being a scenario projection rather than a guarantee: every assumption — appreciation, rent growth, rate, taxes, upkeep — is a visible input you can change. The most useful thing you can do is nudge those numbers and watch how much the answer moves. If a small change flips the result, the decision is close and other factors should decide it.
What costs are not included here?
To keep the math clear and checkable, a few real costs are left out. On the buy side: closing costs at purchase (typically 2–5% of the loan), PMI if you put down less than 20%, and HOA dues. On the rent side: renters insurance and any security deposit. The optional opportunity-cost setting is off by default; turning it on adds the investment growth your down payment could have earned instead. None of these are hidden — they're listed here so you can factor them in yourself.
Last reviewed July 2026. This tool is for education, not financial advice. Results are a projection based on the assumptions you set, not a guarantee of future costs.