If renting costs less than buying in any given month, the difference can be invested. Enter expected annual return on that invested capital.
%/yr
e.g. 7% = S&P 500 avg.
%/yr
Return if DP stays invested
💡 When buying is more expensive monthly, the renter invests that gap. When buying is cheaper, that assumes the buyer "keeps" the savings (pays down equity faster).
📅 Timeline
Your Scenario
▾
yrs
Years before selling / moving
%
For mortgage interest deduction
📌 The calculator will also show at which year buying becomes better than renting regardless of your input above.
⚠️ Please fill in Home Price, Interest Rate, and Monthly Rent.
💡 How This Works
🏠Buying costs include P&I, PMI, tax, insurance, maintenance, and HOA.
📈Equity = home appreciation + principal paid. Net equity subtracts selling costs.
💹The "rent gap" (if any) is modeled as invested at your chosen return rate.
⚖️Break-even = the year when buying's net wealth surpasses renting's invested wealth.
⏱ Break-Even Timeline
Cumulative Rent Cost
Net Buying Cost (after equity)
Break-Even Point
🏠 Buying — After
🏢 Renting — After
📊 Net Wealth Over Time: Buy vs Rent
Buying Net Wealth (home equity − costs)
Renting Net Wealth (invested savings)
📋 Year-by-Year Comparison
🟡 = break-even year 🟢 = your stay year
🎯 Break-Even by Appreciation & Stay Duration
How long you need to stay for buying to win, at different home appreciation rates.
⚠️Disclaimer & Notice
Results are estimates only based on your inputs. They are not guarantees of any financial outcome.
Not financial, legal, tax, or investment advice. Calculator for Savers is not a licensed advisor, lender, CPA, or attorney.
Interest rates, tax laws, and market conditions change frequently. Investment values can go up or down. Past performance does not guarantee future results.
Always consult a licensed professional before making financial decisions.
Homeownership is deeply embedded in the idea of financial success. But the rent-vs.-buy calculation is more nuanced than "renting is throwing money away." Renting and buying are different financial strategies with different risk profiles, liquidity characteristics, and tax implications. The right answer depends entirely on your specific numbers — not on conventional wisdom.
The True Cost of Homeownership
The mortgage payment is only the beginning. Budget for: property taxes (0.5–2.5% of home value annually), homeowner's insurance ($1,200–$3,000/year), HOA fees (can range from $0 to $1,000+/month), private mortgage insurance if under 20% down, and — critically — maintenance and repairs (budget 1–2% of home value per year, more for older homes). On a $400,000 home, these non-mortgage costs can run $12,000–$20,000 per year.
The Hidden Cost of a Down Payment
A $80,000 down payment (20% of a $400,000 home) has an opportunity cost: invested at 7%, that $80,000 grows to $305,000 in 20 years. This doesn't mean renting is always better, but it means the "equity you're building" in homeownership needs to be compared against what that same capital would generate if invested.
The Price-to-Rent Ratio
Divide the home purchase price by annual rent for a comparable property. A ratio under 15 generally favors buying; 15–20 is a gray zone; over 20 often favors renting financially. In many coastal cities, this ratio exceeds 30 or even 40 — meaning the market is pricing in significant appreciation expectations that may or may not materialize.
When Buying Clearly Wins
Buying makes strong financial sense when: you plan to stay for at least 5–7 years (time to break even on transaction costs), your price-to-rent ratio is favorable, mortgage payments are comparable to rent for similar space, and you have sufficient emergency reserves beyond the down payment (don't be "house poor").
When Renting Clearly Wins
Renting wins when: you may move within 3–5 years, the price-to-rent ratio is high, you can invest the down payment and monthly cost difference in a high-return vehicle, you're in a volatile job market where income could drop, or you're in a market with flat or declining home prices. Renting also preserves liquidity and flexibility — undervalued advantages in an increasingly mobile economy.