Rent vs. Buy Calculator
Free rent vs. buy calculator that compares net worth fairly: it invests the renter's down-payment savings, accounts for appreciation, taxes, and selling costs, and finds your break-even year.
How this rent vs. buy calculator works
Most rent-vs-buy tools compare your rent to a mortgage payment and call it a day — which quietly stacks the deck in favor of buying, because it ignores everything a renter could do with the money a buyer ties up. This calculator does the comparison the fair way, the same approach used by rigorous tools like the well-known New York Times calculator: it compares net worth.
Both the buyer and the renter start with the same cash — the buyer's down payment plus closing costs. The buyer sinks it into the house; the renter invests it. Each month, both spend the same total on housing (whichever is larger of the buyer's costs or the rent), and whoever spends less on housing invests the difference at your chosen investment-return rate. The tool then compares each path's net worth over time: the buyer's home equity (the sale value net of selling costs, minus the remaining loan) plus any side investments, versus the renter's portfolio.
The break-even year is the whole game
Buying carries large one-time costs — closing costs when you buy, and agent fees and expenses when you sell. Those costs get spread across the years you own, so buying needs time to pay off. The point where the buyer's net worth catches up to and passes the renter's is the break-even year. Before it, renting-and-investing is ahead; after it, buying is ahead. The single most important input is therefore how long you plan to stay.
Why the winner flips with time
What moves the result most
- How long you stay — longer favors buying, because it dilutes the one-time transaction costs.
- Investment return vs. home appreciation — a higher assumed investment return favors renting-and-investing; higher appreciation favors buying.
- The rent-to-price relationship — expensive homes relative to rent favor renting; cheap homes relative to rent favor buying.
Limitations
This is a model, and it cannot predict real markets, tax situations, or life changes. It excludes the tax deductibility of mortgage interest where it applies, and it assumes steady appreciation and returns rather than the bumpy reality. Use it to understand the trade-offs and find your break-even, then talk to a professional about your specifics. For the concepts, read rent vs. buy: how to actually decide.
Frequently asked questions
Why does this calculator say renting can build more wealth?
Because it does the comparison fairly. Most "rent vs buy" advice ignores that a renter can invest the money a buyer ties up in a down payment, closing costs, and higher monthly costs. This tool invests that difference at your chosen return rate and compares each path's net worth — so renting-and-investing gets proper credit, which it usually does not in simpler tools.
What is the "break-even" year?
It is the point where the buyer's net worth first catches up to and passes the renter's. Before it, renting-and-investing is ahead; after it, buying is ahead. Because buying has large one-time costs (closing to buy, agent fees to sell), you generally need to stay past the break-even year for buying to pay off.
What matters most in the result?
Three inputs dominate: how long you stay (longer favors buying), your assumed investment return versus home appreciation (a higher investment return favors renting), and the rent-to-price relationship. Try nudging the "years you will stay" slider first — the winner often flips around the 4-to-7-year mark.
Is this financial advice?
No. It is an educational model based on the numbers you enter and cannot predict real markets, tax situations, or life changes. Use it to understand the trade-offs, then talk to a licensed professional about your specific situation.
Prefer the concepts first? Read rent vs. buy: how to actually decide or see how we calculate every result.