Rent vs Buy Calculator
Which costs less over the years you actually plan to stay, opportunity cost included.
Two terms decide this and most calculators omit one of them. The renter invests the down payment and closing costs, plus any month where owning costs more than renting, so the comparison is like for like. And buying pays roughly 9% of the price in round-trip transaction costs, which is why short stays lose. Assumes 3% closing, 6% selling, 1.1% property tax, 0.4% insurance, and 1% maintenance a year. This ignores the mortgage interest deduction, which favours buying for itemizers.
The honest version of this comparison has two terms that decide the answer, and most calculators leave one of them out.
Frequently asked questions
How long do I need to stay for buying to make sense?
Commonly five to seven years, but it depends heavily on the gap between rent and ownership costs in your market. The break-even year in the results is the specific answer for your inputs. Below three years it is very hard for buying to win, because transaction costs dominate.
Why is buying still losing after ten years in my scenario?
Most likely your investment return assumption exceeds your appreciation assumption by a wide margin. A renter compounding at 7% against a house appreciating at 3% can stay ahead indefinitely. That is a legitimate result, not an error, and it is sensitive to two numbers nobody can predict.
Does this include the mortgage interest deduction?
No, and that omission favours renting slightly. The deduction only helps if you itemize, and since the standard deduction rose in 2018 most households do not. If you do itemize, buying looks somewhat better than shown here.
What about the non-financial reasons?
They are real and this cannot price them. Stability, freedom to renovate, and not being subject to a landlord's decisions matter to people, as does the flexibility renting preserves. Use the number as one input to the decision rather than the decision itself.
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Calculators model hypothetical outcomes from the inputs you provide. They are informational only, not financial, investment, tax, or legal advice.