Rent vs Buy Calculator
Don't compare a mortgage payment to rent — that's the wrong comparison. This tool invests the cash-flow difference on both sides and shows your net worth over time, with the exact break-even horizon.
Your numbers
= $80,000
Editable assumption — not a live quoted rate.
This dominates the result.
Advanced assumptions
Verdict
Buying comes out ahead if you stay 15 years 4 months or longer.
At your 7-year horizon, renting leaves you about $29,091 better off.
Break-even
15y 4m
Buy net worth · year 7
$183,956
Rent net worth · year 7
$213,047
Net worth over time
Month-1 cash outflow
- Buy (P&I + costs)
- $2,847.62
- Rent (+ insurance)
- $2,015.00
- Mortgage P&I
- $2,022.62
- Upfront cash to buy
- $92,000
What's driving this
- Your 7-year horizon is shorter than the 15y 4m break-even — short horizons favor renting because buying/selling costs are spread over fewer years.
- Your investment return (6%) beats home appreciation (3.5%) by 2.5%, which tilts the math toward renting and investing.
- Rent is assumed to grow 3%/yr — faster rent growth makes buying look better over time.
Year-by-year comparison (data table)
| Year | Home value | Loan balance | Buy net worth | Rent net worth | Difference |
|---|---|---|---|---|---|
| 1 | $414,000 | $316,423 | $68,597 | $107,601 | −$39,004 |
| 2 | $428,490 | $312,607 | $85,889 | $123,730 | −$37,841 |
| 3 | $443,487 | $308,535 | $103,908 | $140,407 | −$36,499 |
| 4 | $459,009 | $304,191 | $122,688 | $157,653 | −$34,965 |
| 5 | $475,075 | $299,555 | $142,264 | $175,493 | −$33,229 |
| 6 | $491,702 | $294,609 | $162,674 | $193,949 | −$31,275 |
| 7 | $508,912 | $289,332 | $183,956 | $213,047 | −$29,091 |
How this calculator works
Each month we model both paths with the same total cash. The buyer spends the down payment and closing costs up front; the renter invests that same amount. Then, whichever path is cheaper in a given month invests the surplus, so neither side gets a hidden cash advantage. We amortize the mortgage, compound the home's value and both investment portfolios, and — to compare fairly — mark the home to market net of selling costs as if you sold that month.
Net worth (buy) = home equity if sold (appreciated value − selling costs − remaining loan) + any side investments. Net worth (rent) = the investment portfolio balance. The break-even is the first month buying's net worth catches renting's. Every assumption is editable and documented on our methodology page, including a worked example you can check by hand.
Frequently asked questions
Is it cheaper to rent or buy?
It depends mostly on how long you stay. Buying carries large one-off costs (down payment, closing, and later selling costs), so over short horizons renting and investing the difference usually wins. The longer you stay, the more those one-off costs are spread out and the more equity and appreciation favor buying. This calculator finds the exact break-even point for your numbers.
How many years until buying beats renting?
For typical assumptions the break-even is often somewhere between 4 and 8 years, but it is highly sensitive to your inputs — especially home appreciation versus investment return, rent growth, and buying/selling costs. Enter your own figures to see your break-even in years and months.
Does this account for investing the down payment?
Yes. The renter invests the cash the buyer would have spent up front (down payment plus closing costs), and in every month the cheaper of the two paths invests the difference, so both scenarios deploy identical money. We then compare ending net worth. This 'invest the difference' approach is what makes the comparison fair.
Why isn't comparing my mortgage payment to rent enough?
A mortgage payment ignores property tax, maintenance, insurance, and transaction costs on the buy side, and it ignores what a renter could earn by investing their unspent cash. Comparing payment to rent systematically misleads. A net-worth model that accounts for equity, appreciation, costs, and investment returns is the correct comparison.
How much should I put down?
A larger down payment lowers your loan and (in the US) can remove PMI at 20% equity, but it also ties up cash that could be invested. The right amount depends on your mortgage rate versus expected investment return and your need for liquidity. Try different down-payment percentages here and watch the break-even and net-worth lines move.