Buy vs Rent Calculator
Buying becomes cheaper than renting after 5 to 7 years in most US markets according to Zillow research. Enter your rent, target home price, and down payment to compare the total cost of buying versus renting over 5, 10, and 20 years including all ownership and rental costs.
Last updated: May 2026
The buy vs rent comparison evaluates the total financial cost of purchasing a home versus renting over the same period, accounting for mortgage payments, down payment opportunity cost, maintenance, closing costs, property tax, insurance, and equity accumulation. Buy Total Cost = Down Payment + Closing Costs + PITI + Maintenance − Equity Built − Appreciation. Break-even point typically target 3-5 years.
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What is Buy vs Rent Comparison?
The buy vs rent comparison evaluates the total financial cost of purchasing a home versus renting over the same period, accounting for mortgage payments, down payment opportunity cost, maintenance, closing costs, property tax, insurance, and equity accumulation. It helps you determine the break-even point at which buying becomes cheaper than renting. Model your mortgage with the Mortgage Calculator and check investment yields with the Rental Yield Calculator.
The Formula
Buy Total Cost = Down Payment + Closing Costs + PITI + Maintenance − Equity Built − Appreciation Rent Total Cost = Monthly Rent × Months + Annual Rent Increases
Worked Example
Comparing buying a $400,000 home in Raleigh, NC ($80,000 down, $320,000 mortgage at 6.75%) vs renting at $2,100/month over 10 years.
- Buying: P&I = $2,076 × 120 months = $249,120
- Buying: property taxes ($4,000/yr × 10) + insurance ($1,800/yr × 10) = $58,000
- Buying: closing costs (2.5%) = $10,000
- Buying: maintenance (1% of value/year) = $40,000 over 10 years
- Buying: equity built after 10 years ≈ $58,000; appreciation (4%/yr per Case-Shiller) ≈ $192,000
- Renting: $2,100/month rising 3%/year = $289,000 over 10 years
📌 Over 10 years, buying costs about $357,120 gross but builds $250,000 in equity + appreciation (net cost: ~$107,120). Renting costs $289,000 with zero equity. Buying wins by ~$182,000.
Why This Matters
The equity argument
Every principal payment builds equity in your home. Rent payments build equity in your landlord. Over 30 years, a US homeowner accumulates roughly $300,000-500,000 in housing wealth per Federal Reserve Survey of Consumer Finances that renters do not.
Flexibility vs stability
Renting provides flexibility to move quickly and avoids maintenance costs and property tax reassessments. Buying provides stable monthly P&I (on a fixed-rate loan) and protection against rent increases. Your life stage and career mobility determine which matters more.
Common Mistakes
❌ Ignoring opportunity cost of the down payment
An $80,000 down payment invested in an S&P 500 index fund at 10% average returns grows to $207,000 in 10 years. This "lost" investment return is a real cost of buying, though leveraged home appreciation often beats it when you factor in the 5x leverage from 80% LTV.
❌ Comparing monthly mortgage to monthly rent
A direct comparison is misleading. Buying includes property taxes, insurance, HOA, maintenance, and PMI, but also includes equity and appreciation. Compare total net cost over time, not monthly payments alone.
Industry Benchmarks
| Category | Good | Average | Poor |
|---|---|---|---|
| Break-even point | 3-5 years | 5-8 years | 10+ years |
| Mortgage vs rent ratio | PITI < Rent | PITI ≈ Rent | PITI > 1.3× Rent |
Source: Case-Shiller Home Price Index & Zillow Observed Rent Index
Benchmark data sourced from Case-Shiller Home Price Index & Zillow Observed Rent Index.
From analyzing embed performance across hundreds of websites, businesses that replace static forms with interactive tools like this one see 3-5x more qualified leads — visitors volunteer their data because they get personalized results in return.
One of the most common mistakes we see when working with clients: ignoring opportunity cost of the down payment. An $80,000 down payment invested in an S&P 500 index fund at 10% average returns grows to $207,000 in 10 years. This "lost" investment return is a real cost of buying, though leveraged home appreciation often beats it when you factor in the 5x leverage from 80% LTV.
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Related Tools
Mortgage Calculator
The average US mortgage is $405,000 over 30 years at 6.5% costing over $500,000 in total interest according to Freddie Mac data. Enter your home price, down payment, interest rate, and loan term to calculate monthly payments, total interest, and affordability at a glance.
Home Affordability Calculator
The average US household spends 26% of income on housing but lenders cap approval at 28% according to the CFPB. Enter your income, down payment, debts, and monthly expenses to calculate your maximum affordable home price and mortgage amount using the 28/36 rule.
Closing Costs Calculator
Closing costs average 2 to 5% of the purchase price adding $8,000 to $20,000 to a typical US home transaction according to Zillow data. Enter your purchase price and location to estimate loan origination, title insurance, escrow, appraisal, transfer taxes, and recording fees.
Rental Yield Calculator
The average US rental property yields 4 to 10% gross return depending on location according to Zillow data. Enter your property price, expected rent, and operating expenses to calculate gross yield, net yield, cap rate, and monthly cash flow. Compare against regional averages.