Rent or buy — how to decide
Buying isn't automatically "throwing money away on rent," and renting isn't automatically worse. The right answer depends on how long you'll stay, prices, rates, and what your down payment could earn if invested instead. This calculator works out the true net cost of each over your time horizon and finds the break-even year — stay longer than that and buying wins; leave sooner and renting is cheaper.
What "net cost" includes
- Buying: down payment + buying costs, all mortgage payments, and yearly costs (property tax, maintenance, insurance) — minus what you'd get back selling the home (its grown value, less selling costs and remaining loan).
- Renting: all the rent you'd pay (rising each year) — minus the investment growth on the down payment you didn't tie up in a house.
This is a simplified model: it captures the big forces (equity, appreciation, rent inflation, opportunity cost of the down payment) but doesn't model every tax break or investing every monthly difference. Treat it as a strong directional guide, not tax advice.
Rules of thumb
- Staying under ~3–5 years? Renting usually wins — buying/selling costs eat any gains.
- The higher home prices and mortgage rates are, the longer buying takes to pay off.
- A down payment that could earn strong investment returns raises the bar for buying.
Why does buying start out more expensive?
Upfront buying costs and early mortgage interest are front-loaded, and selling costs apply if you leave soon. Equity and appreciation take years to overtake them.
Isn't rent just wasted money?
Not necessarily — renting frees your down payment to be invested, and avoids maintenance, tax and the risk of falling home prices. It's a real financial choice, not a mistake.
What if home prices fall?
Set "home growth" to 0 or a negative number to stress-test — you'll see buying's break-even move much further out.