Rent vs Buy Calculator
Compare net worth over your planned stay — not just monthly rent vs mortgage
At 7 years, buying leaves you ahead
Year 5
On a $350,000 home with $2,200/month rent at 6.0% mortgage, buying wins after 5. At your 7-year plan, the $19,806 advantage goes to buying — buyer net worth $153,638 vs renter $133,832 (investing savings at 7.0%).
If you only stay 4 years instead of 7, the gap shifts by $22,983 — Rent looks stronger at shorter horizons.
Price-to-rent ratio is 13.3 (Favors buying).
Rent vs Buy: More Than Monthly Payment
This rent vs buy calculator compares net worth over your planned stay — not just monthly rent versus mortgage payment. Comparing rent to a mortgage payment alone misses most of the math. Buying ties up a down payment, adds closing and selling costs, and carries taxes, insurance, maintenance, and HOA fees. Renting frees that capital to invest — but rent rises over time while a fixed mortgage does not.
A proper rent vs buy analysis compares net worth at your planned exit: home equity minus selling costs versus an investment portfolio built from the down payment and any monthly savings from renting.
The Breakeven Year
The breakeven year is when buying first leaves you with more net worth than renting. Before that point, transaction costs and early mortgage interest dominate. Stays under 5 years often favor renting; stays over 10 often favor buying — but your numbers matter more than rules of thumb.
Drag the "Years You Plan to Stay" slider to see how sensitive your decision is. If the verdict flips between 5 and 10 years, hold period is your biggest uncertainty.
Opportunity Cost of Your Down Payment
If you rent, the down payment and closing costs can stay invested. If buying costs more per month than renting, that difference can also be invested. The return you assume on those investments — typically 5–7% for a diversified stock portfolio — often determines whether renting wins on paper.
Already decided to buy? Model your mortgage payment schedule with our Loan Amortization Calculator.
Frequently Asked Questions
- How does a rent vs buy calculator work?
- It simulates two paths over your planned stay: buying builds home equity while paying mortgage, taxes, and maintenance; renting pays rising rent while investing the down payment and any monthly savings. At your exit year, it compares net worth — home equity minus selling costs vs investment portfolio value.
- What is the breakeven point for renting vs buying?
- The breakeven year is when buying first leaves you with more net worth than renting. It depends on home price, rent, rates, appreciation, and how long you stay. Use the breakeven marker on the chart — if it's beyond your planned stay, renting wins financially.
- What is price-to-rent ratio and how do I use it?
- Price-to-rent ratio = home price ÷ annual rent. Below 15 often suggests buying may work if you stay long enough; 15–20 is neutral; above 20 often favors renting. It's a market signal, not a verdict — always run your specific numbers.
- Why does how long I stay matter so much?
- Buying has large upfront costs (down payment, closing) and back-end costs (selling commissions). You need time for equity growth and mortgage paydown to overcome those. Moving in 3 years often means renting wins even in "buy" markets.
- Should I invest my down payment if I keep renting?
- Financially, yes — the calculator assumes you invest the down payment and monthly savings at your chosen return rate. In reality, you must actually invest, not spend, those savings for renting to win on paper. If you decide to buy, see our Loan Amortization Calculator for payment details.
- What is a good price-to-rent ratio for buying?
- Price-to-rent ratio equals home price divided by annual rent. Below 15 often suggests buying may work if you stay long enough; 15–20 is neutral; above 20 often favors renting. It is a market signal, not a verdict — always run your specific numbers with the sliders above.