How does the rent vs buy break-even work?

The break-even is the first year where the cumulative net cost of buying becomes lower than renting. Buying builds equity but also costs a down payment, closing costs, taxes, insurance, maintenance, and HOA; renting costs rent plus the opportunity cost of not investing your down payment. The tool accounts for both and reports the crossover.

Is buying always better long-term?

No. If your investment return on the down payment is high, or you plan to move soon, renting can beat buying. Buying tends to win only when you stay long enough to recover the upfront costs and capture appreciation.

Does the calculator include mortgage interest tax deduction?

It does not, which conservatively favors renting. For most filers after the 2017 tax changes the standard deduction beats itemizing, so this omission is usually minor — but it should be factored in for high-income, high-interest cases.

Rent vs Buy Calculator

Should you rent or buy? Compare the real total cost over your planned time in the home.

Last updated: September 5, 2026

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Cumulative net cost of renting vs buying over the horizon. The crossover is your break-even year.

How the rent vs buy decision actually works

The famous economic joke is that two people at the same dinner table will always disagree about whether renting or buying is "better." The reason is that it's not one question — it's several, and the answer depends entirely on your time horizon, your rate, and your opportunity cost.

What buying really costs

Buying is not "a mortgage payment." The true monthly cost of ownership includes the principal and interest, plus property tax, homeowners insurance, HOA dues, and a maintenance reserve (industry rule of thumb: 1% of the home's value per year). On top of that, you hand over a down payment and closing costs upfront. What you get in return is a growing pile of equity — the portion of the home you actually own, which rises as you pay down the loan and as the home appreciates.

What renting really costs

Renting looks cheaper month-to-month, but it has its own hidden cost: opportunity cost. The money you didn't put into a down payment could be invested. If you'd instead invest that down payment (and the monthly difference between rent and a mortgage), it compounds over time. The tool models this. A renter isn't "throwing money away" — they're keeping capital free to earn a return.

The break-even year

Put the two side by side and you get a crossover: early on, buying costs more (down payment + closing + higher monthlies). Over time, the equity you build in the home outpaces renting. The break-even year is the point where cumulative buying cost drops below cumulative renting cost. Stay past it and you win; leave before it and renting was the better call.

When the advice breaks

Short horizon: If you'll move within ~3–5 years, buying is usually worse — you can't recover the upfront costs in time.
High investment returns: If your alternative returns are strong (e.g. 8%+ equity returns), renting can beat buying even over long horizons.
High rates vs high appreciation: A high mortgage rate raises buying cost, while high home appreciation helps buyers. Neither is guaranteed — the tool makes the tradeoff visible instead of assuming.
Tax deduction assumptions: The tool deliberately omits the mortgage-interest deduction. For many filers the standard deduction wins anyway, but a high-interest, itemizing borrower would get more benefit than shown.

Methodology & sources

Payment and remaining-balance math use the standard amortization formula. Defaults come from public data: 30-year fixed rate from the Freddie Mac Primary Mortgage Market Survey, median home value from the Zillow Home Value Index, median rent from Zillow Rentals, and median household income from the U.S. Census Bureau. All values are editable.

Frequently asked questions

How is the break-even year calculated?

The tool accumulates each year's ownership cost (down payment, closing, PITI, maintenance, HOA) minus the equity built, and compares it to cumulative rent plus the opportunity cost of the investing the down payment and monthly savings. The first year buying's net cost is lower is the break-even.

Is this a recommendation?

No. It's a transparent decision tool. Weigh it with your own plans — the biggest drivers are how long you'll actually stay and how confident you are in appreciation versus other investments.

Why does my answer differ from a bank's calculator?

Banks typically show only the monthly payment and a "you qualify" amount. This tool shows the full lifecycle cost and includes the cost of capital you'd otherwise invest, which banks rarely surface.

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