How long do I need to stay for buying to win?

It depends on prices, rents and rates, but buying usually needs several years to recover closing and selling costs. The calculator shows the break-even year; change the length of stay to see how the totals move.

Why does the investment return matter?

The cash a buyer spends up front, the down payment and closing costs, has an opportunity cost. If you rent, that cash can be invested instead, so its growth counts in renting's favor.

Does the calculator account for rent increases?

Yes. Rent rises each year by the rent increase you enter. Owners with a fixed-rate loan keep the same principal and interest payment, so the faster local rents rise, the better buying tends to look. Property tax, insurance and upkeep are held at today's amounts.

Are tax deductions included?

No. Mortgage interest and property tax deductions only help if you itemize, and whether you do depends on your income, filing status and other deductions. A tax professional can tell you what applies to you.

Buying a home

Rent vs. Buy Calculator

Buying builds equity but carries costs renters never pay. This calculator totals both paths over the years you expect to stay, counting mortgage payments, taxes, insurance, upkeep and selling costs against appreciation, and what your down payment and closing costs would have earned if you'd invested it instead.

Renting saves you

$17,954

Over 10 years: the difference between the two totals below

Buying comes out ahead if you stay 12 years or longer.

Net cost of buying: $289,569
Net cost of renting: $271,615

How the 10-year totals add up

Every dollar in and out over the time you stay. Money back (the sale of the home, or investment growth) is subtracted.

Buying

Down payment	$100,000
Closing costs	$20,000
Mortgage payments$2,528 a month, principal and interest	$303,393
Property tax	$55,000
Insurance	$18,000
Maintenance and repairs	$50,000
Utilities	$60,000
Selling costs7% of the sale price	$49,371
Sale price when you move3.5% a year appreciation	−$705,299
Loan balance paid off at saleComes out of the sale price	$339,105
Net cost of buying	$289,569

Renting

RentStarting at $2,600 a month, up 3% a year	$357,673
Utilities	$30,000
Investment growth on cash you keep$120,000 invested at 7% a year	−$116,058
Net cost of renting	$271,615

Net cost by years in the home

Each point is the total net cost (the bottom line of the breakdown above) if you moved out after that many years. Lower is better. The dark line is buying and the red line is renting. With your numbers the lines cross at year 12: move out sooner and renting costs less; stay longer and buying costs less.

How the comparison works

The formula

Monthly principal and interest

M = P × r(1 + r)ⁿ(1 + r)ⁿ − 1

P: Loan amount: the home price minus the down payment
r: Monthly interest rate: the annual rate ÷ 12, as a decimal
n: Number of monthly payments: the loan term in years × 12

Sale price when you move

Sale price = Home price × (1 + g)ᵗ

g: Annual home appreciation, as a decimal
t: Years you'll stay in the home

Selling costs

Selling costs = Sale price × Selling cost %

Selling cost %: Agent commission and fees when you sell

Net cost of buying

Cost of buying = Down payment + Closing costs + M × Months paid + t × (Property tax + Insurance + Maintenance) + 12t × Owner utilities + Selling costs − Sale price + Loan balance

Months paid: 12t, or the full loan term if the loan is paid off before you move
Property tax, Insurance, Maintenance: Annual amounts, held flat for each year you stay
Owner utilities: Monthly utilities you'd pay as an owner
Loan balance: What you still owe on the mortgage when you sell, paid off from the sale price

Rent paid

Rent paid = Sum over each year y from 0 to t − 1 of 12 × Rent × (1 + c)ʸ

Rent: Today's monthly rent for a similar home
c: Annual rent increase, as a decimal

Investment growth

Investment growth = (Down payment + Closing costs) × (1 + i)ᵗ − (Down payment + Closing costs)

i: The annual return you expect on invested savings, as a decimal

Net cost of renting

Cost of renting = Rent paid + 12t × Renter utilities − Investment growth

Renter utilities: Monthly utilities you'd pay as a renter

Each path is totaled over the years you expect to stay, and the page itemizes both totals line by line. Buying counts everything you pay out as an owner, including the down payment and closing costs, then credits what the sale returns to you: the home's appreciated value, less the loan balance you pay off and the cost of selling. Mortgage payments stop counting once the loan is paid off, if you stay that long.

Renting counts rent, which rises by your rent increase each year, plus utilities. It then credits what the renter's cash would earn: the money a buyer spends up front, the down payment and closing costs, is assumed to be invested instead at your expected return.

The break-even year is the first length of stay at which buying costs less than renting. Property tax, insurance, maintenance and utilities are held at today's amounts, and tax effects such as the mortgage interest deduction are left out. Results are sensitive to the appreciation, rent increase and investment return you choose, and none of those is guaranteed.

Results are estimates for planning, not a loan offer or financial advice. Lenders, title companies and local rules set the actual figures.

Terms used in this calculator

Home EquityMortgages & financingHome equity is the portion of a property you own outright: its current market value minus everything owed on it. It grows as you pay down the loan and as the home's value rises.MortgageMortgages & financingA mortgage is a loan used to buy real estate, secured by the property itself. If the borrower stops paying, the lender can take the property through foreclosure to recover what is owed.Closing CostsBuying & closingClosing costs are the fees and prepaid expenses paid to complete a real estate purchase, beyond the price and down payment. Buyers typically pay about 2% to 5% of the loan or purchase price.Down PaymentMortgages & financingA down payment is the part of a home's purchase price the buyer pays upfront in cash rather than borrowing. It is usually stated as a percentage of the price and is due at closing.AmortizationMortgages & financingAmortization is the process of paying off a loan with regular, fixed payments over time. Early payments go mostly to interest; later payments go mostly to principal.PITIMortgages & financingPITI stands for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use it to judge whether a borrower can afford a home.Private Mortgage Insurance (PMI)Mortgages & financingPrivate mortgage insurance (PMI) protects the lender, not the borrower, if a borrower defaults on a conventional loan. It is usually required when the down payment is less than 20% of the home's value.EscrowBuying & closingEscrow is an arrangement where a neutral third party holds money or documents until the conditions of a deal are met. The term also refers to the account a lender uses to pay a borrower's property taxes and insurance.

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Frequently Asked Questions

Guides to read next

How Much House Can You Afford?Guide · 6 min readThe right price is the one you can pay every month without strain and still keep savings for repairs and emergencies. This guide shows how lenders measure affordability, what they leave out, and how to build a budget that works for you.The Home Buying Process, Step by StepGuide · 5 min readBuying a home follows a predictable sequence, even though every transaction has its own wrinkles. This guide walks through each step in order, explains what you decide at each one and points to the detailed guide for every stage.Closing Costs Explained: What Buyers Pay and WhyGuide · 9 min readClosing costs are the fees and prepaid expenses due when a purchase completes, on top of the down payment. They vary by state, loan and price, and some are negotiable. This guide explains each category, how to read your disclosures and how to keep costs down.

More calculators

Mortgage CalculatorMonthly payment with taxes, insurance, PMI and an amortization schedule.Home Affordability CalculatorThe price range your income and debts support under the 28/36 rule.Closing Cost CalculatorLine-by-line closing costs and cash needed at closing.

Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.