Rent vs Buy Calculator
Should you keep renting or buy a home? Enter your rent, a home price, and your mortgage details to compare the real monthly cost of owning — principal & interest, property tax, insurance, and HOA — against renting, plus the total cost over time and an estimated break-even year.
How it works
Step 1 — Monthly mortgage payment. Your loan amount is the home price minus your down payment. Principal & interest is calculated with the standard fixed-rate amortization formula:
Monthly payment = Loan × r(1+r)n ÷ ((1+r)n − 1), r = annual rate ÷ 12, n = years × 12
For example, a $320,000 loan at 6.5% for 30 years gives a principal & interest payment of $2,022.62/month.
Step 2 — Full monthly cost of owning. We add property tax (annual amount ÷ 12), homeowners insurance (annual amount ÷ 12), and HOA dues to get the true monthly cost of owning, and compare it with your monthly rent. With the example above — $4,400/year tax ($367/month), $2,400/year insurance ($200/month), no HOA — owning costs $2,589.62/month against $2,000/month rent, so renting is cheaper by $589.62/month in Year 1 on cash flow alone.
Step 3 — Totals and break-even. Cash flow isn't the whole story: mortgage payments build equity, and the home may appreciate. For each year we total the rent you would pay (with your annual rent increase) and the net cost of owning (everything you pay out, minus the equity you'd hold if you sold). The break-even year is the first year owning's cumulative net cost falls below renting's. Stay shorter than that and renting usually wins; stay longer and buying usually pulls ahead. Because appreciation, tax growth, and future rates are unknowable, the break-even is an estimate, not a promise.
Frequently asked questions
Is it cheaper to rent or buy a home?
It depends on how long you stay, local home prices, rent growth, mortgage rates, and home appreciation. Buying usually builds equity over time, while renting keeps monthly cash costs lower in the early years in many markets. This calculator compares both on the same assumptions so you can see the trade-off with your own numbers.
What is the break-even point for buying a home?
The break-even point is the year when the cumulative net cost of owning — mortgage interest, tax, insurance and HOA minus the equity and appreciation you have built — drops below the cumulative cost of renting. Before that year renting is cheaper overall; after it, buying comes out ahead on these assumptions. It is an estimate that moves a lot with the appreciation and rent-growth rates you enter.
What costs of owning does this calculator include?
It includes your down payment, monthly principal and interest, property tax, homeowners insurance, and HOA dues. It does not include closing costs, maintenance and repairs, private mortgage insurance (PMI), or the opportunity cost of your down payment, so treat the result as an estimate and budget extra for upkeep — a common rule of thumb is 1% of the home's value per year.
How is the monthly mortgage payment calculated?
Principal and interest use the standard amortization formula: payment = loan × r(1+r)^n ÷ ((1+r)^n − 1), where r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments (loan term in years × 12). Early payments are mostly interest; the principal share grows over time.
What is the 5-year rule for buying a house?
The 5-year rule is a rule of thumb that buying tends to make financial sense if you plan to stay at least five years, because upfront costs and early mortgage payments (which are mostly interest) need time to be offset by equity and appreciation. Your personal break-even year from this calculator is a better guide than any fixed rule.
Does renting ever beat buying in the long run?
Yes. If home prices are high relative to rents, mortgage rates are high, appreciation is low, or you move frequently, renting can remain cheaper for many years — sometimes for the entire comparison period. In that case the calculator shows no break-even within 30 years.