Rent vs Buy Calculator

The 5-year rule is a rough guideline that you need to stay in a home about five years to recover the costs of buying and selling. Selling costs alone typically run around 6% (agent commission plus closing fees), and it takes years of appreciation and mortgage paydown to offset them. If you might move sooner, renting often comes out ahead on the math. This calculator computes your actual break-even point instead of assuming a fixed five years.

Your down payment has an opportunity cost, since money tied up in a home cannot be invested elsewhere. The renter scenario invests the down payment, plus any month where buying would cost more than renting, at the rate you set. A common long-run assumption for a diversified stock portfolio is 7% per year. Adjusting this rate shows how sensitive the rent-vs-buy outcome is to what the market actually returns.

The calculator applies a fixed 6% selling cost to your home's projected value at the end of the analysis, covering a modeled agent commission and sale closing costs. It does not separately model purchase closing costs, loan origination fees, points, title insurance, or moving costs. Do not add those costs to the down-payment input. Doing so would also reduce the modeled loan and change the renter's initial investment. Treat them as an additional cash-to-close cost outside this model.

US home prices have historically appreciated about 3-4% per year over the long run, roughly in line with inflation. High-demand metros have exceeded that, and slower markets have trailed it. A conservative input of 2-3% gives you a margin of safety, since appreciation is the single largest swing factor in whether buying or renting wins mathematically.

No. The calculator produces an estimate based on the numbers you enter. It does not model the mortgage interest deduction, state and local tax rules, PMI for down payments below 20%, or your personal cash flow needs. For a six-figure decision, consult a licensed financial planner or mortgage advisor.