Rent vs. buy calculator

The part most rent-vs-buy comparisons skip

This calculator accounts for something a lot of quick comparisons miss: your down payment isn't free money you're "saving" by buying — it's capital that could otherwise be invested elsewhere. That opportunity cost is weighed against real home appreciation and rent growth, not just the sticker-price monthly payments.

The result tends to favor buying more as your expected time in the home stretches past 5-7 years, and favor renting more the shorter that timeline gets.

Read the full guide: Rent vs. Buy: How to Actually Decide →

"Rent is throwing money away" is half an argument

The phrase is repeated so often it functions as a conclusion rather than a claim. It's worth taking apart, because the honest version cuts both ways.

Rent buys you housing for a month. When the month ends, you own nothing. That's true. But a large share of an early mortgage payment also buys you nothing you keep: interest, property tax, insurance, and mortgage insurance are all consumed, not accumulated. In the first years of a 30-year loan, the principal portion — the part that actually becomes equity — is a minority of the payment.

The correct comparison isn't rent versus mortgage payment. It's rent versus the non-equity portion of ownership, which includes interest, taxes, insurance, maintenance, and the opportunity cost of money tied up in a down payment. Sometimes that comparison strongly favors buying. Sometimes it doesn't, and the people who bought at the wrong moment in their own timeline discover this at closing when they see the seller's net sheet.

The costs that never appear in a payment quote

Selling costs are the item most often left out of casual rent-versus-buy reasoning, and they're the largest. Between entry and exit costs, a purchase needs somewhere in the range of 8–14% of appreciation just to break even on transaction friction. In a market appreciating 4% a year, that's a few years of gains consumed before you're ahead of where you started.

The break-even horizon is the whole question

Almost every rent-versus-buy analysis reduces to a single variable: how long you stay. Short horizons favor renting, long horizons favor buying, and the crossover is usually somewhere between three and seven years depending on your market, your rate, and the spread between local rents and prices.

Which means the most important input isn't financial at all. It's an honest read on your own life: job stability, relationship trajectory, whether the city is where you want to be in five years. People routinely overestimate how long they'll stay, and that single error does more damage than any rate difference.

Where renting is straightforwardly the better decision

There's a version of this analysis that treats renting as a failure state you exit as soon as possible. That's not right, and pretending otherwise leads people into purchases they regret.

Renting is the better financial decision when your horizon is genuinely under three years, when your job or industry could relocate you, when the local price-to-rent ratio is extreme enough that renting plus investing the difference outperforms owning, or when buying would consume the emergency fund that makes homeownership survivable in the first place.

That last one deserves emphasis. Arriving at closing with nothing left is how a manageable repair becomes credit card debt. A buyer who waits eight months to preserve a cash reserve is in a materially stronger position than one who bought immediately with nothing behind them — even though the second one "stopped throwing money away" sooner.