What is Rent vs Buy Calculator?
Free rent vs buy calculator with year-by-year wealth comparison, exact tipping point, and full cost modeling (appreciation, rent inflation, opportunity cost, taxes, maintenance, PMI). Free to embed on your website. No signup required.
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Free Rent vs Buy Calculator
Skip the "rent is throwing money away" platitudes and run the actual math. This calculator compares your net wealth year by year under both scenarios — assuming a renter invests the down payment + closing costs at your specified return rate, and whoever has the lower monthly cost invests the difference. Factors in mortgage P&I, property tax, insurance, maintenance, HOA, PMI, mortgage-interest tax deduction, home appreciation, selling costs at exit, rent inflation, and investment opportunity cost. Shows the exact year buying overtakes renting.
If you buy
20% avoids PMI. Below that, PMI is added until LTV ≤ 80%.
If you rent
National average: ~3–4%/yr historically.
Time horizon
After 10 years
Buying wins by $71,539
You'd come out wealthier owning over this horizon.
Tipping point
Year 5
If you stay at least 5 years, buying comes out ahead.
Buyer wealth
$77,825
Renter wealth
$6,286
After 10 years
Buying wins by $71,539
You'd come out wealthier owning over this horizon.
Tipping point
Year 5
If you stay at least 5 years, buying comes out ahead.
Buyer wealth
$77,825
Renter wealth
$6,286
Wealth comparison, year by year
The year the diff turns positive is when buying first overtakes renting.
| Year | Buyer wealth | Renter wealth | Diff (buy − rent) |
|---|---|---|---|
| Year 1 | -$31,038 | $1,799 | -$32,837 |
| Year 2 | -$21,418 | $3,108 | -$24,526 |
| Year 3 | -$11,643 | $3,877 | -$15,520 |
| Year 4 | -$1,581 | $4,188 | -$5,770 |
| Year 5 | $9,258 | $4,482 | +$4,776 |
| Year 6 | $20,970 | $4,795 | +$16,174 |
| Year 7 | $33,615 | $5,131 | +$28,484 |
| Year 8 | $47,259 | $5,490 | +$41,769 |
| Year 9 | $61,971 | $5,875 | +$56,097 |
| Year 10 | $77,825 | $6,286 | +$71,539 |
Buying wins by
$71,539
Tipping point
Year 5
When to use this rent vs buy calculator
“Buy a house, build equity, stop throwing money away on rent” is the most repeated piece of conventional wisdom in American personal finance — and it's frequently wrong. Whether buying actually leaves you wealthier than renting depends on six variables that interact non-linearly: how long you stay, your local rent vs price ratio, the rate you can borrow at, expected home appreciation, what return you'd earn investing the down payment instead, and how rents inflate in your market. A 5-year stay in a high-cost coastal city with modest appreciation usually favors renting; a 15-year stay in a moderate-cost city with steady appreciation usually favors buying. This calculator quantifies the trade-off using the same wealth-comparison methodology the NYT Rent vs Buy interactive popularized.
Use it before you make a commitment that will lock up your savings for years. Use it again when rates or prices in your market move. And use it to make the case to a partner who won't stop quoting “rent is throwing money away” — show them the year-by-year wealth table and the exact tipping point at your assumptions.
How the wealth comparison works
The calculator assumes both you-the-buyer and you-the-renter start with identical liquid net worth. The buyer takes the down payment + closing costs out and puts it into the home; the renter keeps that money invested at whatever return rate you specify (default 7%, the long-term real S&P 500 return). Each month, both pay their housing cost. Whoever has the lower monthly cost invests the difference at the same investment return.
At each year-end, the calculator compares total net worth:
- Buyer wealth = home equity (home value × appreciation − loan balance − selling costs) + investments accumulated from months where buying was cheaper than renting
- Renter wealth = the original down + closing investment grown at the return rate + investments accumulated from months where renting was cheaper than buying
The tipping point is the first year buyer wealth ≥ renter wealth. Before that year, renting and investing leaves you wealthier; after it, owning leaves you wealthier. If your planned stay is shorter than the tipping point, the math says rent.
Why monthly cost timing matters
In year 1 of a typical 20%-down, 30-year mortgage at today's rates, the full monthly buyer cost (P&I + tax + insurance + maintenance) is usually 30–60% higher than the equivalent rent. That means the renter is the lower-cost party for the first several years, and the renter's side investment compounds at the assumed return rate. Each month the buyer doesn't catch up. But as rent inflates (3–4%/yr historically), and the buyer's payment stays fixed, the gap narrows and eventually reverses. Around year 5–10, the buyer's monthly cost typically falls below the now-much-higher rent — and from that point on, the buyer is the lower-cost party, narrowing the wealth gap. The tipping point is when the buyer's home equity finally catches up.
Sensitivity to assumptions
Home appreciation is the most powerful lever. At 5%/yr appreciation, buying wins within 3–5 years in most scenarios. At 0%/yr, buying may never win across a 30-year horizon. Investment return is the second-most-powerful — at a 10% return assumption, the renter compounds so fast that buying rarely wins; at 4%, buying wins quickly. Property tax rate matters more than most people realize: a 0.5% tax (Hawaii) vs a 2.2% tax (New Jersey) on a $500k home is the difference between $208/mo and $917/mo in tax, which scales the entire comparison.
Common rent-vs-buy mistakes
- Comparing rent only to mortgage P&I. The honest comparison is rent vs. full PITI plus maintenance, HOA, PMI, and opportunity cost of the down payment. Most online calculators omit at least two of these.
- Forgetting transaction costs. Buying and selling each cost 2–8% of home value. A 3-year hold with 7% selling costs alone needs ~7% home appreciation just to break even on the round-trip, before mortgage interest is considered.
- Assuming home appreciation matches stock returns. US home prices have appreciated about 3.5%/yr nominal over the last 50 years per the FHFA Home Price Index — well below the S&P 500's ~10% nominal. The leverage from a mortgage amplifies the return, but maintenance and transaction costs offset much of that amplification.
- Ignoring rent inflation. A fixed-rate mortgage payment doesn't inflate; rent does. Over 30 years, even a modest 3% rent inflation triples the rent. This is the single strongest argument for buying when the horizon is long.
- Underestimating maintenance. The 1%-of-home-value-per-year rule of thumb is the floor, not the ceiling. Joint Center for Housing Studies at Harvard finds actual annual maintenance spending averages 1–4% depending on home age. Older homes consistently hit the upper end.
- Treating “throwing money away on rent” as a math argument. Mortgage interest, property tax, maintenance, HOA, and selling costs are also money that doesn't build equity. On a 30-year mortgage at 7%, over half of your total payments are interest. Rent and these costs serve the same purpose: paying for shelter.
Frequently Asked Questions
How does this calculator decide if buying or renting is better?+
Both scenarios start with identical net worth. The buyer takes the down payment + closing costs out and puts it into the home; the renter keeps that money invested at the assumed return rate. Each month, both pay their housing cost. Whoever has the lower monthly cost invests the difference. At each year-end, the calculator compares total net worth: home equity (after selling costs) + invested savings for the buyer, vs invested savings for the renter. The tipping point is the first year buyer wealth ≥ renter wealth. This is the same methodology the New York Times Rent vs Buy interactive popularized and is the consensus approach in personal-finance literature.
What's a realistic home appreciation rate?+
Long-term US home prices have appreciated about 3.5%/yr nominally per the FHFA Home Price Index since the 1970s. Adjusted for inflation, real appreciation has averaged just 1–1.5%/yr. Hot metros (Austin, Boise, parts of FL) have outperformed; legacy cities (Detroit, Cleveland) have lagged. Use 3–4% as a safe default; use your metro's actual 10-year CAGR if you can find it.
What investment return should I assume on the down payment?+
The S&P 500 has returned about 10%/yr nominally and 7%/yr real (inflation-adjusted) over the last 50 years. For a like-for-like comparison with nominal home appreciation, use 7–10%. Conservative planners use 6%; aggressive ones use 10%. The higher the return, the harder it is for buying to win — which is realistic since the down payment is genuinely an opportunity cost.
Does this account for the mortgage interest deduction?+
Yes — at your marginal tax rate. Mortgage interest and property tax (subject to the $10k SALT cap, which this calculator doesn't model) are deductible if you itemize. Enter your federal+state marginal rate (e.g. 24% for a typical middle-income borrower) and the calculator applies the deduction monthly. If you take the standard deduction (most filers since the 2017 TCJA), set marginal rate to 0 — you get no tax benefit.
Why does the buyer "lose" in year 1?+
Closing costs (typically 2–5% of home price) and the down payment are paid upfront, while the renter keeps that money invested. The buyer's monthly cost (PITI + maintenance) is usually higher than rent at year 1. Both factors put the buyer behind early. Home appreciation, mortgage paydown, and rent inflation slowly close the gap. The tipping point is when those factors fully overcome the early disadvantage.
Should I include maintenance in the comparison?+
Yes — and don't lowball it. The Joint Center for Housing Studies at Harvard finds annual maintenance averages 1–4% of home value, depending on age and condition. New construction (years 1–10): ~0.5%. Mid-life (10–30 years): ~1.5%. Older homes (30+ years): 2–4%. The 1% default is conservative; if your target home is 30+ years old, use 2%.
What about non-financial factors?+
The math is only part of the decision. Renting offers mobility, no maintenance hassles, and easier financial flexibility. Buying offers stability, control over the property, and a forced savings mechanism. Many buyers happily accept worse financial outcomes for the qualitative benefits of ownership. The calculator quantifies the financial side so you can make an informed trade-off, not so you can declare a winner.
Does this work for high-cost cities (NYC, SF, LA)?+
Yes, but you may need to adjust assumptions. In NYC and SF, rent inflation has historically run 4–6% (above the 3% national average), property tax is unusually low (NYC ~0.9%, SF ~1.2%), and home appreciation has been highly variable. Plug in your actual local rent inflation and property tax rate for an accurate result. The tipping point in high-cost cities is often longer (7–12 years) because the rent-to-price ratio is unfavorable.
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