Rent vs. Buy Calculator
Compare the long-term wealth impact of renting versus buying a home. We factor in appreciation, taxes, maintenance, and the opportunity cost of investing your down payment in the stock market instead.
Buying Scenario
Renting Scenario
After 15 Years, It is Better to
RENT
You could save $8,971 by renting a home.
Net Financial Impact Over Time (Lower is Better)
Rent vs Buy: Understanding Your Bottom Line
Deciding whether to rent or buy a home is one of the most consequential financial decisions you will make. While conventional wisdom often dictates that buying is always better, the math reveals a more complicated story depending on where you live and how long you plan to stay.
The Sunk Costs of Homeownership
When you rent, your monthly payment represents the maximum you will pay for housing in a given month. When you buy, your mortgage is the minimum you will pay. Sunk costs associated with buying include property taxes, homeowners insurance, maintenance (often estimated at 1% to 2% of the home value annually), and HOA fees. In the first few years of a mortgage, the vast majority of your monthly payment goes toward interest, not equity.
The Opportunity Cost of Renting
Conversely, renters must consider opportunity costs. The substantial down payment required for a home could instead be invested in a diversified index fund. Historically, the stock market has returned an average of 7% to 10% annually. A solid Rent vs. Buy calculator computes what happens if a renter takes the difference between a monthly mortgage payment and their rent, and invests it.
The Breakeven Horizon
Typically, acquiring a house incurs 2% to 5% in closing costs, and selling incurs 5% to 6% in commissions. Because of these steep transaction costs, renting is almost always financially superior if you plan to move within 3 to 5 years. The longer you stay in a purchased home, the more time you have to absorb those costs and let appreciation compound—pushing you past the Breakeven Horizon.