Buy-vs-Rent

Should You Buy or Rent?

Most people assume buying is always better. It builds equity. It is an investment. You are not throwing money away on rent. These things are partially true — but they are not the whole story, and the parts that get left out are the ones that matter most.

The full story includes the $15,000 to $25,000 in closing costs you pay to get in, the $25,000 to $40,000 in agent commissions you pay to get out, the maintenance bills that average 1 to 2 percent of your home's value every year, and the opportunity cost of the down payment — which is the money you could have invested instead of locking into the house. Put all of that against the fact that rents rise every year while a fixed mortgage payment does not, and the math gets genuinely complicated.

This calculator does the math honestly. Enter your purchase price, mortgage rate, and local property tax rate alongside your rent and how long you plan to stay. It will show you your true monthly cost of ownership, what a renter investing the down payment would accumulate, the break-even year when buying overtakes renting, and which scenario leaves you with more money. Sometimes buying wins by a lot. Sometimes renting wins. Often the answer depends almost entirely on one number: how many years you plan to stay.

Buy vs. Rent Calculator

The honest comparison - true cost of ownership vs. renting and investing the difference, including opportunity cost of the down payment

Home purchase
True cost of ownershipMortgage P+I is just the starting point. Property tax, insurance, maintenance (historically 1-2% of home value per year), HOA fees, and PMI (if down payment under 20%) are all real ongoing costs.
Opportunity cost of down paymentThe down payment could instead be invested. This is the most frequently ignored cost of homeownership. At 7% returns, an $80K down payment grows to $157K in 10 years - that growth is a real cost of buying.
Closing costs & selling costsPurchase closing costs run 2-4%. Agent commissions and closing costs on sale typically run 6-8% of the sale price. These transaction costs mean buying almost always loses in the short run.
Home purchase price $450,000
Down payment 20%
Mortgage rate 6.75%
Mortgage term 30 yrs
Property tax rate (annual) 1.20%
Annual maintenance (% of value) 1.00%
Homeowner's insurance (annual) $1,800
HOA fees (monthly) $0/mo
Purchase closing costs 3.0%
Home appreciation rate (annual) 3.5%
Renting
Rent + invest scenarioThe honest comparison. The renter invests the down payment and closing costs from day one, plus any monthly surplus if ownership costs exceed rent. This is net worth vs net worth, not payment vs payment.
Annual rent increaseHistorical average is around 3%. Rising rent erodes the renting advantage over time - a fixed mortgage payment becomes relatively cheaper as rent climbs.
Monthly rent $2,200/mo
Annual rent increase 3.0%
Renter's insurance (annual) $200
Assumptions
Mortgage interest deductionReduces your effective ownership cost by your marginal tax rate times annual interest paid. Note: the 2017 tax law reduced the value of this deduction for many homeowners by raising the standard deduction threshold.
Years to modelThe most important variable. Buying almost always wins over 20-30 years due to appreciation and fixed payments. Renting often wins over 3-5 years due to transaction costs. The break-even is typically 5-8 years.
Home appreciation3-4% reflects the US long-run historical average per Case-Shiller. Local markets vary significantly. Appreciation is not guaranteed and can be negative over short periods.
Investment return (renter invests surplus) 7.0%
Marginal tax rate (mortgage deduction) 24%
Years to model 10 yrs
Selling costs at exit (agent + closing) 6.0%

Buy vs. Rent Calculator - Results Summary

Recommended over 10 years
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Monthly cost breakdown
Mortgage P+I-
Property tax-
Insurance + maintenance + HOA-
PMI (if applicable)-
Mortgage interest tax saving-
True monthly cost of owning-
Monthly rent (year 1)-
Net worth if you buy
equity minus selling costs
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Net worth if you rent
portfolio value
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Net worth difference
buy minus rent
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Total interest paid
over mortgage life
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Home value at exit
after appreciation
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Opp. cost of down payment
if invested instead
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Chart view
Net worth if buying
Net worth if renting + investing
Disclaimer: Results are estimates for educational purposes only and do not constitute financial or real estate advice. The mortgage interest deduction is simplified - actual deductibility depends on itemizing, SALT caps, and other factors. Home appreciation, investment returns, and rent increases are assumptions, not guarantees. Transaction costs vary by location. Consult a qualified financial advisor and real estate professional before making housing decisions.

Sources: Case-Shiller Home Price Index for historical appreciation benchmarks. Federal Reserve and Zillow Research for rent trend data. NYT Buy vs. Rent methodology for opportunity cost framework.