Is it better to rent or buy a house?

It depends on how long you will stay, local price-to-rent ratio, mortgage rates, and what you would do with the down payment otherwise. If you plan to stay 5+ years in a market with rent growth above 3%, buying usually wins. For stays under 3 years, renting almost always wins because closing costs dominate.

How long does it take to break even when buying a home?

Typically 3-7 years. The break-even year depends on mortgage rate (higher = longer), home appreciation (higher = shorter), rent growth (higher = shorter), and closing costs (higher = longer). Our calculator shows the exact break-even year for your inputs.

What is the 5-year rule for buying a home?

The 5-year rule says you should only buy if you plan to stay at least 5 years. Under 5 years, closing costs (2-5%) and the slow pace of equity build-up usually make renting cheaper. This is a rule of thumb — the actual break-even can be 3 years (hot market) or 8+ years (cold market).

Does the calculator include opportunity cost of the down payment?

Yes. If you rent, we assume you invest the down payment at your chosen return rate (default 7%). If you buy, that cash is locked in equity. This is often the largest hidden cost of buying and flips the decision for high-earners in bull markets.

What inputs matter most?

Years to stay is the single biggest factor. After that: mortgage rate vs investment return (the spread drives opportunity cost), and home appreciation vs rent growth (the spread drives long-run advantage). Maintenance and property tax also matter in high-tax states.

Why does buying cost more in early years?

Closing costs (~3% of price) are paid upfront. Mortgage payments in year 1 are ~80% interest, not principal. Maintenance, property tax, insurance, and HOA all add up. Equity and appreciation take time to accumulate enough to offset these.

What if home prices fall?

Set appreciation to 0% or negative to stress-test. In a declining market the break-even year pushes well past 7-10 years, and renting often wins even for long stays. Historical US average is ~3% annual appreciation but varies widely by metro.

Should I factor in the tax deduction?

Mortgage interest and property tax deductions help, but since the 2017 TCJA the standard deduction ($29,200 married 2025) means most buyers no longer itemize. This calculator excludes the deduction for conservatism; if you itemize, buying advantage is slightly larger.

Rent vs Buy Calculator

The 5-year rule says buying usually beats renting if you stay at least 5 years, but the real answer depends on rent, home price, mortgage rate, appreciation, and investment return. This calculator runs both scenarios side-by-side: your total rent cost (with annual increases plus opportunity cost on money you would have used as a down payment), versus your total cost of buying (mortgage interest, taxes, insurance, maintenance, HOA, closing costs minus equity built and home appreciation). The output tells you the break-even year — when buying starts to win — so you can make a confident decision.

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calendar_today Updated: April 2026

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compare_arrows Rent vs Buy Inputs

Home Price

Monthly Rent

Down %

Rate

Years Stay

Appreciation %/yr

Rent Growth %/yr

Advanced (tax, maintenance, HOA, opportunity cost)

Investment Return %/yr

Loan Term (yrs)

Property Tax %

Maint %

Closing %

HOA / mo

Insurance / yr

analytics Verdict

Recommendation

Buy

Break-even year: —

Total Rent Cost

—

Total Buy Cost

—

Net Advantage (Buy) —

Monthly Mortgage P&I —

Year-by-Year Net Cost

Yr	Rent	Buy	Diff

Interpretation

Enter values to see your rent vs buy breakdown.

Input Values

Home Price

Down Payment %

Mortgage Rate %

Monthly Rent

Years to Stay

Loan Term (years)

Annual Rent Growth %

Home Appreciation %

Investment Return %

Property Tax %

Maintenance %

Closing Costs %

HOA (monthly)

Home Insurance (annual)

tips_and_updates Tips

• Plan to stay at least 5 years before buying beats renting in most markets
• Higher mortgage rates and lower appreciation push the break-even year later
• Budget 1-2% of home value per year for maintenance — it is not optional
• Include opportunity cost: the down payment could earn 6-8% in index funds
• Rent growth matters — a 3-5% annual rent hike accelerates buying's advantage
• HOA fees and property tax vary wildly by city — use local numbers, not averages
• Closing costs (2-5%) are sunk cost, recovered only if you stay long enough

How to Use This Calculator

Enter home price and rent

Use comparable rental in the same area for a fair comparison.

Set mortgage terms

Down payment %, rate, loan term.

Set growth assumptions

Appreciation, rent growth, investment return.

Add ownership costs

Property tax, maintenance, HOA, insurance.

Pick years to stay

This drives the whole decision.

See break-even year

And the recommendation based on net advantage.

The Formula

Buying has high upfront costs (down payment, closing) and recurring costs (maintenance, taxes) that take years to offset via equity and appreciation. Renting is cheaper short-term but pays nothing toward ownership and exposes you to rent inflation. The crossover typically happens between year 3 and year 7 depending on local prices, rates, and rent growth.

Net Advantage = Total Rent Cost - Total Buy Cost (positive = buying wins)

lightbulb Variables Explained

Total Rent Cost Sum of monthly rent over N years (with annual growth) + opportunity cost on down payment
Total Buy Cost Mortgage P&I + property tax + insurance + HOA + maintenance + closing costs - equity built - appreciation gain
Break-even Year First year where cumulative buy cost is lower than cumulative rent cost

tips_and_updates Pro Tips

Plan to stay at least 5 years before buying beats renting in most markets

Higher mortgage rates and lower appreciation push the break-even year later

Budget 1-2% of home value per year for maintenance — it is not optional

Include opportunity cost: the down payment could earn 6-8% in index funds

Rent growth matters — a 3-5% annual rent hike accelerates buying's advantage

HOA fees and property tax vary wildly by city — use local numbers, not averages

Closing costs (2-5%) are sunk cost, recovered only if you stay long enough

Frequently Asked Questions

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