Should You Rent or Buy This Home?
Compare your net worth on the day you sell against what you would have if you kept renting and invested the difference. Buying counts closing costs, selling costs, PMI, property tax, insurance, maintenance and HOA. Renting counts rent growth, renter's insurance and the return on every dollar not tied up in the home.
Buying side
Renting side and your timeline
How to read the result
The tool runs both paths one month at a time for up to 30 years. The buyer pays the mortgage payment, property tax, insurance, maintenance, HOA and PMI (PMI runs only while the loan balance is above 80% of the home price). The buyer's position on a sale day is the home value minus the selling cost, minus the remaining loan balance, minus the closing costs paid at purchase.
The renter keeps the down payment and closing costs invested from day one. Each month the cash difference between what buying would have cost and what renting costs is added to that portfolio, or withdrawn if renting costs more. Rent rises once a year by your rent growth input, and the portfolio compounds monthly at your investment return rate.
The break-even year is the first year the buyer's net position is ahead of the renter's portfolio. If it never happens inside 30 years, the verdict says renting wins for the 30-year window. The verdict at the top uses the number of years you set in the slider.
Defaults are conservative: 4.5% investment return instead of the long-run stock average, 3% rent increases and 3% price growth. Change any assumption to test your own market, then read the sensitivity table before you decide.
Limitations
This is a pre-tax model: mortgage interest deductions and capital gains rules are not counted. Maintenance is charged on the purchase price, not the rising market value, which is the conservative reading. The model assumes a fixed-rate mortgage with no refinance, no gap between selling and renting, and a renter who actually invests the difference every month. After the loan is paid off, the owner's cost drops to tax, insurance, maintenance and HOA. Use this as one input to the decision, not financial advice.
FAQ
How is a rent vs buy break-even year computed?
The tool compares two net worth values each year. Buying side net worth is the home value, minus the selling cost percent, minus the remaining loan balance, minus the closing costs paid at purchase. Renting side is the invested down payment and closing costs plus every month's difference between buying and renting costs, compounded at your chosen return. The first year buying is ahead is your break-even year.
Why does buying usually lose in the first years?
Up-front closing costs and the high early interest share of the mortgage come off the buyer's side, while the renter's portfolio starts near zero but grows from the monthly savings plus the down payment. The lead flips as the principal share of the payment grows, the home appreciates and rent rises.
What should the investment return input be?
Use what you would realistically earn on the money: a conservative cash or bond rate if you would not invest in stocks, or a long-run stock average if you would. The default 4.5% sits between the two. Even a 1% change moves the break-even, which is why the sensitivity table shows it live.
Is my input sent anywhere?
No. The page computes everything in your browser with JavaScript and does not store or transmit any value you enter.
What is the 5% rule?
A rough shortcut: yearly unrecoverable ownership costs are about 5% of the home price, mostly interest, tax and maintenance. If 5% of the price divided by 12 is well above local rent for a similar home, renting tends to win early; if it is below, buying looks better sooner. The full simulation on this page is more precise than the rule.
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