Rent vs Buy Calculator

Generally 5-7 years to break even on transaction costs. In high-appreciation markets, it may be 3-4 years. In slow markets, 7-10 years. This calculator shows your specific break-even point.

The national historical average is about 3-4% annually. Use local data for better accuracy — some markets appreciate faster (5-8%) while others grow slowly (1-2%) or even decline.

Maintenance (1-2% of value annually), repairs, appliance replacement, landscaping, HOA fees, higher utility costs, and the opportunity cost of the down payment invested elsewhere.

This basic version does not include mortgage interest deduction. Since the 2017 tax law doubled the standard deduction, most homeowners no longer benefit from itemizing mortgage interest.

If you invest the down payment instead of buying (e.g., in index funds averaging 7-10% returns), the growth represents an opportunity cost of homeownership. This is significant for large down payments.

Rents typically increase 2-4% annually. Over 10+ years, rent compounds significantly — $2,000 rent growing at 3%/year becomes $2,688 after 10 years. This makes buying more favorable over longer periods.

A home is primarily shelter, not an investment. While it builds equity, returns historically trail the stock market. Buy for stability and lifestyle, not purely for investment returns.

Mortgage payments are 'forced savings' — you build equity whether or not you would otherwise save that money. For undisciplined savers, this is a significant behavioral benefit of homeownership.

Buying costs (2-5% of purchase price) and selling costs (5-8%, including agent commissions) are major factors. These transaction costs are a key reason why short-term homeownership is expensive.