How this calculator works
"Renting is throwing money away" and "buying always builds wealth" are both half-truths. The honest comparison counts every cost on both sides over the period you'll actually live there, then sees which leaves you better off. Renting's cost is simple: the rent you pay, rising each year. Buying's cost is tangled — a mortgage, yes, but also property tax, insurance, maintenance, possibly PMI, HOA, and big one-time closing and selling fees — offset by the equity you build and the home's appreciation when you sell.
The hidden hinge is your down payment. Sink $80,000 into a home and that money can't be invested elsewhere, so this tool charges buying an opportunity cost on the cash tied up. That single factor is why a paid-off-looking home isn't automatically the cheaper path, and why the answer flips depending on how long you stay: short stays can't spread the upfront and selling costs thin enough, so renting wins; long stays let equity and rising rents tilt it to buying.
The method
For each possible year you might sell, the tool sums buying's carrying costs and upfront money (grown at your investment return for opportunity cost), then subtracts the equity you'd recover at sale:
The first year where buying's cost drops below renting's is your break-even point.
- Stay 3 years: renting wins by ~$25,000 — closing and selling costs haven't been earned back.
- Stay 7 years: roughly break-even, buying edging ahead.
- Stay 12 years: buying wins by ~$76,000 — equity compounds and rent has climbed.
- Raise the rent to $3,200 and buying wins even at 7 years by nearly $100,000.
Acronyms used on this page
- HOA
- Homeowners Association
- PMI
- Private Mortgage Insurance
What tips the scale
Three levers move the answer most: how long you stay (the single biggest factor), the rent-to-price ratio (cheap rent relative to home prices favours renting), and your investment return (a higher return makes the tied-up down payment costlier, favouring renting). Maintenance and selling costs quietly matter too — they're real money that "rent is wasted" arguments conveniently forget. Drag the years slider and watch the verdict flip at your break-even point.
Frequently asked questions
Is it better to rent or buy?
Mostly a function of how long you stay. Short term, renting usually wins because of buying's large upfront and selling costs; long term, equity and rising rents make buying cheaper. This tool finds your exact break-even year.
What's the break-even point for buying?
The years you must own before buying beats renting, once closing, selling, maintenance, and the opportunity cost of your down payment are counted. For typical assumptions it's often 5–8 years.
Does this assume I invest the difference?
It charges buying an opportunity cost on the cash tied up upfront, which is the cleanest way to keep the comparison fair without guessing your exact investing behaviour. Renting's lower upfront cost is reflected by buying carrying that opportunity cost.
Is this tax-adjusted?
No — it excludes the mortgage interest deduction and capital-gains treatment, which affect a minority of filers given the high standard deduction. For a tax-specific view, consult a professional; the pre-tax comparison is the right starting point for most people.