A rent vs buy breakeven calculator compares the total net cost of renting versus buying a home over time. It determines the breakeven point — the number of years after which buying becomes financially more advantageous than renting, considering factors like mortgage payments, property appreciation, rent increases, tax benefits, and investment returns on money saved by renting.

The key factors are: home price appreciation rate, mortgage interest rate, rent growth rate, and investment returns. Higher appreciation favors buying; higher mortgage rates favor renting. Rent growth matters because if rents rise faster than home values, buying locks in housing costs. The length of time you plan to stay is also critical — the longer you stay, the more likely buying wins.

Renting can be better when: (1) you plan to move within a few years (closing costs eat into gains), (2) home prices are overvalued with low appreciation potential, (3) mortgage rates are very high, (4) you can invest the down payment and monthly savings at high returns, or (5) the local price-to-rent ratio strongly favors renting. Renting offers flexibility and lower upfront costs.

Closing costs are significant! Buyer closing costs (typically 2–5% of home price) are added to the upfront cost of buying. Seller closing costs (typically 5–6%) are deducted from your proceeds when selling. These transaction costs mean buying only makes sense if you stay long enough for appreciation and equity to overcome these frictional costs — usually at least 3–7 years.

This calculator focuses on pre-tax, apples-to-apples net wealth comparison. In the US, mortgage interest and property taxes may be deductible if you itemize, but the 2018 Tax Cuts and Jobs Act increased the standard deduction, making these benefits less impactful for many homeowners. If you want to factor in tax benefits, consider them as an additional advantage for buying, which would shorten the breakeven time.

Buy Net Wealth = Current home market value − remaining loan balance + any investment surplus (if monthly home costs are lower than rent). Rent Net Wealth = Value of invested down payment + invested monthly savings (if renting is cheaper monthly) − total rent paid. When Buy Net Wealth exceeds Rent Net Wealth, buying wins. We also deduct seller closing costs from the buy side when selling.

They're estimates, not guarantees. Historically, US homes have appreciated ~3–5% annually on average, and rents have grown ~3% per year. But these vary widely by location and time period. We recommend testing multiple scenarios (optimistic, baseline, pessimistic) using our preset buttons to understand the range of possible outcomes. A good rule: if buying only wins under very optimistic assumptions, renting may be safer.