How to Use This Calculator
- 1
Enter Your Monthly Rent and Mortgage Payment
Input your current or expected monthly rent and the principal-and-interest portion of your potential mortgage payment.
- 2
Specify the Home Purchase Price and Down Payment
Enter the total price of the home you are considering and the cash down payment amount.
- 3
Optionally Expand Advanced Options
Click 'Show advanced options' to adjust home appreciation (default 3%), rent inflation (2%), investment return (7%), property tax (1.2%), maintenance (1%), and closing cost rates (3%).
- 4
Review Your Break-Even Analysis
See the Break-Even Point, True Monthly Buy Cost, Home Equity After 30 Years, 30-Year Net Buy Advantage, and Upfront Buying Costs. The Insights panel shows upfront capital required, long-term advantage, and annual ownership overhead with a breakdown bar. Scroll down for the 30-year chart and year-by-year table.
Example Calculation
A prospective homeowner compares renting at $2,000/month to buying a $400,000 home with a $60,000 down payment, using default advanced settings.
Monthly Rent ($)
2,000
Monthly Mortgage Payment ($)
2,300
Home Purchase Price ($)
400,000
Down Payment ($)
60,000
Results
Break-Even Point
2 years
True Monthly Buy Cost
$3,033
Home Equity After 30 Yrs
$970,905
30-Yr Net Buy Advantage
$181,870
Upfront Buying Costs
$72,000
Tips
Account for Selling Costs
Real estate commissions (typically 5-6% of sale price) are not included. If you plan to sell, your true break-even extends further — for a $400,000 home appreciating at 3%, that is about $20,000-24,000 in year 1 selling costs.
Adjust the Investment Return Rate
The default 7% return assumes long-term stock market investing. If you would keep the down payment in a savings account earning 4%, changing this rate significantly affects the break-even — try both to compare.
Use the Year-by-Year Table
The table shows each year's net buy cost, net rent cost, home equity, and buy advantage. Use it to identify the crossover point and understand how equity accumulation drives the long-term comparison.
Rent vs. Buy Break-Even Analysis
Deciding whether to rent or buy is one of the most significant financial decisions.
This calculator projects the point at which buying becomes more financially advantageous than renting, incorporating opportunity cost, home appreciation, property taxes, maintenance, and a full 30-year projection to guide your housing strategy in 2026.
The Logic Behind the Comparison
The calculator tracks cumulative costs year-by-year, comparing the total financial position of renting (including investing the down payment) against buying (including equity from appreciation and principal payoff).
Cumulative Rent Cost = Sum of (Monthly Rent x 12) + Opportunity Fund Growth
Cumulative Buy Cost = Upfront Costs + Sum of (Mortgage + Taxes + Maintenance) - Home Equity
Break-Even Point = Year when Buy Advantage turns positive
The Opportunity Fund starts at the down payment plus closing costs and grows at the investment return rate.
Home Equity is the home value minus remaining loan balance.
The break-even occurs when buying's total position (costs minus equity) falls below renting's total position (rent paid plus opportunity gains).
Worked Example: $2,000 Rent vs $400,000 Home
A prospective homeowner compares renting at $2,000/month to buying a $400,000 home with a $60,000 down payment, $2,300 mortgage (P&I), 3% appreciation, 2% rent inflation, 7% investment return, 1.2% property tax, 1% maintenance, and 3% closing costs.
- Upfront Buying Costs: $60,000 (down) + $400,000 x 3% (closing) = $72,000
- Annual Property Costs: $400,000 x 1.2% (tax) + $400,000 x 1% (maintenance) = $4,800 + $4,000 = $8,800/yr
- True Monthly Buy Cost: $2,300 + $733/mo (tax + maintenance) = $3,033/mo
- Monthly Difference vs Rent: $3,033 - $2,000 = $1,033 more than renting
- 30-Year Home Equity: Home appreciates to ~$971K, loan paid down — equity reaches $970,905
- 30-Year Net Buy Advantage: Factoring in all costs, opportunity cost, and equity: buying wins by $181,870
- Break-Even Year: Buying becomes advantageous in year 2
The early break-even reflects strong equity accumulation from 3% appreciation on a $400,000 home, which quickly outpaces the 7% return on the relatively small $72,000 opportunity fund.
Cash Flow vs. Wealth Accumulation Models
Different rent-vs-buy models emphasize different aspects.
A cash flow model simply compares monthly outlays: $2,000 rent vs $3,033 total ownership cost.
Under this model, renting is cheaper by $1,033/month.
A wealth accumulation model — which this calculator uses — includes equity growth from appreciation and principal payoff, plus the opportunity cost of the down payment.
This provides a more complete picture of long-term financial outcomes.
Cash Flow Model: Monthly Rent vs (Mortgage + Tax + Maintenance)
Wealth Model: (Rent + Opportunity Growth) vs (Ownership Costs - Equity Gained)
The cash flow model is useful for short-term budgeting, while the wealth accumulation model reveals the true long-term financial position.
Frequently Asked Questions
What is the rent vs. buy break-even point?
The break-even point is when the cumulative financial benefits of owning (equity from appreciation and principal payoff) outweigh cumulative costs (down payment, closing costs, mortgage, taxes, maintenance, and the opportunity cost of not investing the down payment). With default inputs, buying breaks even with renting in year 2.
Why is the True Monthly Buy Cost higher than the mortgage payment?
The True Monthly Buy Cost includes mortgage principal and interest ($2,300) plus property tax ($400/mo at 1.2% of $400,000) and maintenance ($333/mo at 1% of $400,000), totaling $3,033/month. The mortgage payment alone understates the real cost of homeownership.
What factors most affect the break-even point?
Home appreciation rate and investment return rate have the largest impact. Higher appreciation favors buying (equity grows faster). Higher investment returns favor renting (opportunity cost of the down payment increases). Property tax rates and maintenance costs also significantly affect the outcome.
How does opportunity cost work in this calculator?
The calculator assumes that if you rent, your down payment ($60,000) and closing costs ($12,000) are invested at the specified return rate (default 7%). This growing investment fund is added to the rent side of the comparison, representing the wealth you build by not tying capital up in a house.
What does the Insights panel show?
The Insights panel displays your total upfront capital required (down payment plus closing costs), the 30-year net advantage of buying vs renting, annual ownership overhead costs, and a breakdown bar showing the split between down payment and closing costs.