Rent vs Buy Calculator
Should you rent or buy? Compare monthly rent against mortgage payments and homeownership costs to find the break-even point.
The rent vs. buy decision is one of the largest financial choices most people make. This calculator compares the true total cost of each option over a 5-year horizon — accounting for all the hidden costs of homeownership that are often overlooked.
Monthly cost of buying:
Monthly Mortgage (P&I) = P × [r(1+r)^n] / [(1+r)^n − 1]
Where P = loan amount, r = monthly interest rate, n = number of payments (months)
Additional monthly homeownership costs:
| Cost | Typical Amount |
|---|---|
| Property tax | 1.0–2.5% of value / 12 months |
| Homeowner’s insurance | 0.3–0.5% of value / 12 months |
| HOA fees (if applicable) | $100–$600/month |
| Maintenance & repairs | 0.5–1.5% of value / 12 months |
| PMI (if < 20% down) | 0.5–1.0% of loan / 12 months |
Monthly cost of renting:
- Monthly rent
- Renter’s insurance: typically $15–30/month
- No maintenance costs (landlord’s responsibility)
5-year total cost of buying:
Total = (Monthly PITI) × 60 + Transaction costs in − Equity built + Opportunity cost of down payment
Transaction costs — the hidden drag:
- Purchase costs: ~3–5% of purchase price (closing costs, inspection, title)
- Selling costs: 5–6% commission + ~1% closing costs on exit
- Total roundtrip: 8–11% of home value just in transaction friction
The break-even timeline: Most research places the rent-vs-buy break-even at 5–7 years in a typical market. Buying costs less in the long run — but only after you’ve been in the home long enough for equity and appreciation to overcome the high transaction costs.
Key variables that shift the calculation:
- Rent-to-price ratio: Annual rent / home price. Above 5% favors renting; below 3% strongly favors buying
- Mortgage rate: Each 1% increase in rate adds ~10% to monthly payment on a 30-year loan
- Home appreciation rate: Historically ~3–4%/year nationally (varies dramatically by metro)
- Investment return on down payment: If invested instead, a down payment earning 7%/year is a real opportunity cost of buying
- How long you plan to stay: The #1 factor — short stays almost always favor renting
This calculator uses your actual inputs to show the 5-year true cost of each path in your specific situation.