RentOrOwn

Rent vs Buy Calculator

Side-by-side comparison of renting vs buying over your time horizon — including equity build-up and opportunity cost of the down payment.

Time horizon: 10 years

Home price

Down payment %

Mortgage term: 30 years

Mortgage APR

Property tax (% of home/yr)

Maintenance (% of home/yr)

Home appreciation %/yr

Monthly rent

Rent inflation %/yr

Alt. investment return %/yr

Buying wins

by $58,131

over 10 years

Net cost of buying: $184,985
Net cost of renting: $243,116
Monthly P&I: $2,275.44
Final home equity: $299,568

What you entered

Home price: $450,000Down payment: 20%Mortgage rate: 6.5%Monthly rent: $2,400Time horizon: 10 years

1
Down payment & loan amount
20% of $450,000.00= $90,000.00 down, $360,000.00 loan
2
Monthly mortgage payment (P&I)
amortizing-loan formula at 6.5% over 10 years= $2,275.44/mo
3
Total cost of buying
down payment + total P&I + 10yrs tax/maintenance + 6% closing costs − final home equity= $184,985.07
4
Total cost of renting
10yrs of rent (3%/yr inflation) − growth on the down payment left invested instead= $243,116.10
5
Buying wins
$184,985.07 vs $243,116.10= by $58,131.03

Result

Buying wins: by $58,131

Over 10 years, buying comes out ahead by $58,131 — but this is sensitive to how long you stay, home appreciation, and what you'd actually do with the money you didn't put into a down payment. Re-run this if any of those assumptions feel off.

Rent versus buy on a $400,000 home, by how long you stay

Each row buys with 20% down on a 30-year mortgage at 6.5%, pays 1.2% property tax and 1% maintenance a year, and assumes 3% appreciation. Renting starts at $2,000 a month rising 3% a year, with the deposit invested at 7% instead. Buy cost is net of the equity you hold at sale.

Years held	Monthly principal and interest	Equity at sale	Net cost of buying	Net cost of renting	Cheaper option	By how much
3 years	$2,023	$128,556	$74,659	$56,178	Rent	$18,480
5 years	$2,023	$164,155	$105,203	$95,215	Rent	$9,987
7 years	$2,023	$202,618	$132,882	$135,437	Buy	$2,554
10 years	$2,023	$266,283	$168,431	$197,761	Buy	$29,330
15 years	$2,023	$390,998	$209,073	$305,651	Buy	$96,578
20 years	$2,023	$544,316	$221,113	$415,314	Buy	$194,202

Break-even lands between five and seven years on these assumptions, which is close to the common rule of thumb. The reason short holds favour renting is the transaction cost: roughly 6% of the price disappears in buying and selling fees, and in the first few years most of the mortgage payment is interest rather than principal, so little equity has built to offset it. The monthly payment stays at $2,023 in every row because the mortgage is a 30-year loan whatever your plans - selling early leaves a balance to settle, it does not repay the loan. Every row is a scenario, and appreciation is the assumption doing the most work: at 0% growth rather than 3%, buying looks far worse. The comparison also charges renting an opportunity cost by investing the deposit at 7%, which is the fair way to compare but assumes you actually invest it.

The 5% rule

A rule of thumb says renting costs ~5% of the home's value per year (1% maintenance + 1% taxes + 3% lost return on the down payment). If rent is below that, renting wins; above it, buying wins.

Time horizon is everything

Buying almost always wins over 10+ years because you build equity and lock in your housing cost. Renting often wins under 5 years because closing costs (3–6% to buy, 6–10% to sell) eat into any equity you'd build. The breakeven point is typically 4–7 years depending on your market.

Hidden costs of owning

Homeownership costs beyond the mortgage: property tax (1–2%/year), insurance (0.3–1%), maintenance (1–2%), HOA fees if applicable, and opportunity cost of the down payment. A $400,000 home can cost $8,000–$16,000/year in non-mortgage expenses alone.

Frequently asked questions

Is it better to rent or buy a house?

It depends on how long you'll stay, local price-to-rent ratios, and your financial situation. Buy if: staying 5+ years, local rents are high relative to prices, you have 20% down. Rent if: staying under 3 years, local prices are inflated, you need flexibility, or you'd invest the down payment difference.

How long do you need to live in a house to make buying worth it?

Typically 4–7 years to break even against renting, due to closing costs. In hot markets with strong appreciation, breakeven can be 2–3 years. In flat markets, it might take 7–10 years. This calculator shows your specific breakeven based on your numbers.

What is the opportunity cost of a down payment?

A $80,000 down payment (20% on a $400K home) invested in index funds averaging 7% would grow to ~$157,000 in 10 years. That $77,000 in potential gains is 'lost' by locking the money into your house. However, if the home appreciates and you avoid PMI, buying can still win.