Rent vs Buy Calculator
The real question isn't "payment vs rent", it's total cash out over the years you'll stay, on both sides. This computes rent outgo (growing 3%/yr) against buy outgo: down payment, mortgage interest, tax, insurance, upkeep, and the 6% you pay to sell.
Assumptions (US long-run averages, editable reasoning in the math section): rent grows 3%/yr, home value 3%/yr, property tax 1.1%/yr of value, insurance 0.5%/yr, upkeep 1%/yr, selling costs 6%, 30-yr fixed loan. Leave the money for the down payment out of the picture, its investment return is shown separately.
How the math works
Rent side: Σ over your years of 12 × rent × 1.03year, money that buys you nothing at the end.
Buy side: down payment + Σ mortgage payments − loan principal you get back at sale (paydown + any appreciation) − 6% selling costs. Add-ons: property tax 1.1% × value/yr, insurance 0.5% × value/yr, upkeep 1% × price/yr (national averages; high-tax states differ, edit in your head).
Mortgage payment: P = L·i / (1 − (1+i)−360) with i = rate/12; balance after N months: B = L(1+i)N − P·((1+i)N − 1)/i, the standard amortization identities.
Opportunity cost, shown separately: the down payment invested at 5%/yr instead would earn D × (1.05N − 1). Add it to the buy side for the apples-to-apples "invest the difference" comparison.
Assumption sources: long-run US HPI ≈ 3–3.5% nominal (FHFA historical), rent growth ≈ 3% (Census ASPS trend), typical sale transaction costs 6% (NAR), tax/insurance/upkeep as % of value from FHFA/Census annual-owner-cost breakdowns. Rate is yours, the 30-year fixed, not the teaser.
Frequently asked
What's the 5-year rule for buying?
Buying almost always loses under ~3 years (the 6% selling cost eats the paydown) and usually wins past ~7 years at normal appreciation. The crossover in the mid-range US market typically lands 4–6 years, exactly the range this calculator lets you zoom.
Why is the breakeven rent useful?
It answers the question in rent terms: the monthly rent at which both sides cost the same over your stay. Rent below it → renting wins. Above it → buying wins. It's the one number to remember from the whole page.
Does this count paying down principal as a cost?
No, principal is forced savings: you get it back at sale, so it's excluded from buy outgo. Interest is a true cost. That's why a 20% down payment helps more than people think: it shrinks the interest line, not just the monthly payment.