Free tool for US homebuyers

Rent or Buy a Home?

Compare buying with renting and investing over your chosen horizon—including home equity, opportunity cost, monthly cost differences, and break-even timing.

Up to 100 years Equity vs Portfolio Opportunity Cost Hold-Period Timeline Break-Even Timing

Your Inputs

Property and Mortgage
Home Price
$
Down Payment
%
Mortgage Rate30-year fixed
%
Property Tax (annual)
%
Annual Homeowners Insurance
$
Annual Maintenance% of home value
%
Annual PMIwhile equity is below 20%
%
Buyer Closing Costs
%
Selling Costsagent fees + other costs
%
Renting
Current Monthly Rent
$
Annual Rent Growtheditable assumption
%
Market Assumptions
Annual Home Appreciationeditable assumption
%
Alternative Investment Returnbefore taxes and fees
%
Analysis Horizonyears · maximum 100
↓ Methodology ↓
How this calculator works — formulas and sources
Monthly Owner Cost
P&I = L × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Cost = P&I + property tax + insurance + maintenance + PMI
The comparison includes principal and interest, property tax, homeowners insurance, maintenance, and PMI while loan-to-value exceeds 80%. Tax and maintenance track the estimated home value. HOA dues, tax deductions, utilities, and improvements are not modeled. Mortgage Affordability Calculator
Remaining Mortgage Balance
Balance(t) = L × (1+r)ᵗ − P&I × [(1+r)ᵗ − 1] / r
t = month · r = monthly rate
The standard amortization formula updates the balance monthly. The split between principal and interest depends on the rate, term, and point in the loan schedule.
Buyer Net Equity
Future value = Price × (1 + appreciation%)ᴬ
Net equity = Future value − Remaining balance − Future value × selling costs%
A = years in the selected horizon
Selling costs reduce realizable equity. The editable default is 6%; replace it with a realistic estimate for your market and expected transaction.
Portfolios and Monthly Difference
Renter's initial capital = down payment + buyer closing costs
Each month, the lower-cost side invests the difference
The renter invests the capital that was not used to buy. Each month, whichever option costs less invests the difference at the selected return. This keeps both rent growth and changing ownership costs inside the comparison.
Total Rent Paid
Each month: Rent(t + 1) = Rent(t) × (1 + annual growth%)¹⁄¹²
Total rent = sum of monthly rent over the horizon
Rent grows monthly at the annual-equivalent rate entered by the user. Total rent is informational; the final-position comparison uses the monthly difference between renting and ownership costs.
Net Advantage
Buyer position = realizable home equity + buyer portfolio
Advantage = buyer position − renter portfolio
A positive result favors buying under the selected assumptions; a negative result favors renting and investing. Each timeline point assumes the home is sold then, so purchase and selling costs affect even early results. Investment taxes and fees, renters insurance, moving costs, liquidity, risk, and nonfinancial value are excluded. Mortgage vs Rent Explained
Official sourcesCFPB: owning a home · CFPB: private mortgage insurance · FHFA: House Price Index · BLS: rent indexes

Financial Comparison

Result at the end of the horizon
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—
—
If you ended each path at these points

Each card compares the net positions if you sold the home or ended the rental path then. Red: renting leads clearly. Amber: the result is sensitive. Green: buying leads clearly.

How sensitive is this result?

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View calculation details
🏠 Buy
Initial monthly cost—
Value in year 30—
Mortgage balance—
Net home equity—
Total position—
🏢 Rent
Current monthly rent—
Rent in year 30—
Total rent paid—
Total position—
How it works

Why the answer is not simple

Buying does not always win, and renting does not always lose. The result depends on your time horizon, local costs, financing, and what you would do with the cash not used to buy.

HOME EQUITY
What buying is actually worth

A buyer builds equity through principal repayment and home appreciation. Net equity is the estimated sale value minus the remaining mortgage and selling costs. Transaction costs and interest-heavy early payments can keep realizable equity low during the first years.

OPPORTUNITY COST
What the upfront cash could earn

The down payment and buyer closing costs are capital that could remain invested. The calculator gives the renter that same initial capital, then compounds it at the editable investment return. Returns are uncertain and may be reduced by taxes and fees.

TIME HORIZON
The early years are expensive

Buying and selling costs weigh most heavily over short holding periods. There is no universal break-even year: price, rent, financing, maintenance, appreciation, and selling costs can move it substantially or prevent a crossover within your horizon.

CHANGING MONTHLY COSTS
A fixed mortgage is only partly fixed

A fixed-rate mortgage stabilizes principal and interest, but property tax, insurance, maintenance, and HOA dues can change. Rent may also rise or remain stable depending on the lease and market. Use local, comparable figures for both paths.

SENSITIVITY
Small assumptions can change the answer

Appreciation and investment return compound for decades, so a modest rate change can reverse the result. The sensitivity cards vary the investment return around your entry. Also test conservative home-growth, rent-growth, and selling-cost scenarios.

WHAT NUMBERS MISS
Flexibility and stability have value

Buying can provide control, stability, and freedom to alter a home. Renting can provide mobility, liquidity, and less repair responsibility. These tradeoffs do not appear in the financial result, but they belong in the decision.

FAQ

Frequently asked questions

How many years does it take for buying to beat renting?
There is no reliable universal break-even period. Mortgage terms, down payment, purchase and selling costs, comparable rent, maintenance, appreciation, and alternative returns can move the crossover—or keep it outside your chosen horizon. Test several plausible scenarios instead of relying on one forecast.
Why include an investment return?
The down payment and closing costs have an opportunity cost. If you rent, that money could remain invested, although returns are not guaranteed and may involve volatility, taxes, and fees. Enter a conservative assumption and test lower or negative returns too.
Does the calculator include PMI?
Yes. It applies the annual PMI assumption while the estimated loan balance exceeds 80% of the estimated home value. Actual cancellation rules, lender requirements, and premiums vary, so replace the default with your quoted terms.
Does buying make sense if I may move in three to five years?
A short horizon increases the weight of buying and selling costs, but the result still depends on your actual figures. Enter realistic closing costs, comparable rent, and a conservative appreciation scenario rather than assuming a fixed break-even rule.
Does the calculator include tax benefits from homeownership?
No. It does not monetize mortgage-interest or property-tax deductions because the marginal benefit depends on itemization, current federal and state rules, loan characteristics, and the rest of your tax return. Consult a qualified tax professional for your circumstances.
What important costs are not included?
The model excludes HOA dues, utilities, renovations, renters insurance, moving costs, investment taxes and fees, capital-gains taxes, and the nonfinancial value of stability or flexibility. Add omitted recurring costs to your reasoning outside the calculator.