About this calculator
The rent versus buy question is usually framed wrongly. It is not "rent is rent and buy is an investment." It is a comparison of two bundles of monthly cash flow, where owning also trades liquidity for a fixed obligation and a large upfront cost.
How it works
Owning costs the mortgage payment plus property tax, insurance, and maintenance — the last of which renters simply do not pay and which is frequently underestimated. Against that, the home builds equity as it appreciates and the mortgage balance falls. The break-even year is when cumulative ownership cost, net of equity built, drops below cumulative rent.
Frequently asked questions
Is it cheaper to rent or buy?
It depends on how long you stay and local price appreciation. Renting wins on flexibility and lower upfront cost; owning wins when you stay long enough for amortization and appreciation to outweigh transaction costs.
What is the true monthly cost of owning?
Principal and interest, plus property tax, homeowners insurance, and maintenance. Many buyers focus only on principal and interest and are surprised by the gap. Maintenance is commonly underestimated at around 1% of home value per year.
How long should I stay before buying?
Most analyses point to five years as a practical minimum, because transaction costs of 6 to 8% need time to be recovered. Staying under three years usually makes renting cheaper even when prices are rising.
Does a home always appreciate?
No. Prices fall in some markets and periods. Over the very long run US nominal prices have trended upward, but over a specific 5 to 7 year holding period a decline is entirely possible, and you are exposed to it.
Should I include HOA fees in the comparison?
Yes, if the comparable rental does not include equivalent services. A condo with a $400 monthly HOA fee is not comparable to a $1,500 standalone rental, and the difference should be reflected in the rent you use.
What about the tax deduction for mortgage interest?
Home mortgage interest and property tax are deductible only within limits, and the value depends on your marginal rate. Run the numbers both ways, and do not treat the deduction as a reason to buy on its own.