Rent vs Buy Calculator -- Should You Rent or Buy?

It depends on your situation. Buying is often better if you plan to stay 5+ years, have stable income, and can afford a down payment. Renting is better for short-term stays, uncertain job situations, or when home prices are very high relative to rents. Use this calculator to compare the total costs based on your specific numbers.

The breakeven point is when the cumulative cost of buying equals the cumulative cost of renting. This typically ranges from 3-7 years depending on your down payment, mortgage rate, property taxes, and local market conditions. Our calculator shows your exact breakeven year.

Renting costs include monthly rent plus annual increases. Buying costs include mortgage payments, property taxes, insurance, maintenance (typically 1% of home value yearly), HOA fees, closing costs (2-5% when buying), and selling costs (typically 6% for realtor fees). You should also consider opportunity cost - the investment returns you could earn by renting and investing your down payment elsewhere.

Home appreciation (typically 3-4% annually) builds equity and wealth when you buy. However, this must be weighed against the opportunity cost of your down payment. If you rent and invest that money at 7-10% returns, the investment growth might exceed home appreciation, especially in the first few years.

The 5-year rule exists because buying involves significant upfront costs (down payment, closing costs) and selling costs (typically 6% in realtor fees). It takes several years of building equity and home appreciation to overcome these transaction costs. Staying less than 5 years often means you'll lose money compared to renting.

With the higher standard deduction ($13,850 single, $27,700 married in 2023), most homeowners don't itemize deductions anymore. Mortgage interest deductions are less valuable than they used to be. Our calculator provides a realistic comparison without assuming tax benefits, which is appropriate for most buyers today.