Understanding the Rent vs Own Calculator
Renting and buying each have hidden costs that a simple payment comparison misses. This calculator weighs the full picture — rent and its annual increases against a mortgage payment plus property taxes, insurance, maintenance, and the opportunity cost of your down payment — to estimate which option leaves you financially better off over the time you expect to stay.
Buying is not always cheaper
Homeowners build equity, but they also pay for repairs, property taxes, and closing costs that renters avoid. In the early years, much of a mortgage payment is interest rather than equity, and the upfront transaction costs of buying and later selling are substantial. The longer you stay, the more buying tends to win, because those one-time costs spread across more years.
The role of the break-even horizon
Most analyses find a break-even point — often around five to seven years — beyond which owning beats renting. If your job, family plans, or city might change before then, renting can be the smarter financial choice even if owning feels more permanent. Factor in lifestyle and flexibility, not just the numbers.
Tips & things to know
- •Include maintenance — budget roughly 1% of the home’s value per year.
- •Account for the return you could earn by investing your down payment instead.
- •A short expected stay usually favors renting; a long one favors buying.