Rent vs. Buy Calculator

The rent vs. buy decision is far more complex than simply comparing your monthly rent to a mortgage payment. Buying a home involves substantial costs that rarely appear in the headline number: property taxes, homeowner's insurance, maintenance and repairs (typically 1–2% of home value annually), HOA fees, and the opportunity cost of your down payment.

The single most important variable in this calculation is how long you plan to stay. Buying a home has high upfront transaction costs — typically 2–5% of the purchase price in closing costs, plus 5–6% in real estate agent commissions when you sell. These costs need to be amortized over your time in the home. If you buy a $400,000 home and sell after 3 years, you may have paid $30,000+ in transaction costs alone, which can easily exceed the equity you've built.

The break-even point — the number of years after which buying becomes cheaper than renting — varies dramatically by market. In high-cost cities like San Francisco or New York, the break-even can be 10+ years. In lower-cost markets in the Midwest or South, it can be as short as 2–3 years.

One often-overlooked factor is rent inflation. Rents historically increase 3–5% per year, while a fixed-rate mortgage payment stays constant. Over 20 years, this means your fixed mortgage payment becomes relatively cheaper in real terms, while rent becomes increasingly expensive. This is a powerful argument for buying if you plan to stay long-term.