Buying a home
Rent vs Buy Calculator
Built and maintained by Chandranshu Kumar · Figures from the IRS, SSA, BLS and Freddie Mac
Why the timeline decides it
Buying front-loads a lot of cost, the down payment, closing fees, and years of interest-heavy payments. It takes time for the equity you build and any rise in the home's value to make up for that. Drag the years slider and you will usually see renting win for a short stay and buying win for a long one. This is a simplified model, so it leaves out things like the tax treatment of mortgage interest, selling costs, and what you could earn by investing the down payment instead. Use it to get the shape of the decision, not the last dollar.
Simplified estimate. Assumes about 3% yearly growth in both rent and home value. Not financial advice.
How the comparison is worked out
The rent side is the simpler one. It adds up the rent you would pay across the years you plan to stay, growing it about 3% a year, which comes to roughly $183,899 over 7 years at $2,000 a month.
The buy side counts the money that actually leaves your pocket: the down payment, the mortgage payments over those years, and carrying costs like property tax and upkeep. Then it subtracts the equity you build, both the principal you have paid down and any rise in the home's value. What remains is the net cost of owning, about $169,282 here.
The smaller of the two wins. In this example buying comes out ahead by about $14,617. Because buying front-loads its costs, the answer often flips from renting to buying as the years you stay go up. See the full method.
Common questions
Is it better to rent or buy?
It mostly comes down to how long you stay. Buying needs several years for equity and price growth to overtake what renting would have cost. Short stays favor renting, long stays favor buying.
How many years does buying usually take to win?
There is no single number, but the break-even often lands somewhere around five to seven years for typical prices and rates. Drag the years slider and watch the verdict change: the point where buying overtakes renting is your break-even for the numbers you entered.
What does this comparison leave out?
It is a simplified model. It does not weigh the tax treatment of mortgage interest, the cost of selling when you move, or what you could earn by investing the down payment instead of tying it up in a house. Use it for the shape of the decision. To check that the payment itself fits your income, try the home affordability calculator.