Monthly rent vs. monthly mortgage is the wrong comparison. Rents rise every year while a fixed mortgage stays flat, but the buyer also pays "invisible" costs — maintenance, property tax, insurance, closing fees — while the renter's down payment keeps compounding in investments. The real question is total cost over the years you will actually stay, and that is what this calculator answers.
The model works like a monthly ledger. For buying, it adds the down payment and closing costs up front, then accumulates mortgage payments, property tax, insurance, maintenance, and HOA dues while the home's value grows with appreciation. At the end of your horizon it credits your equity (home value minus remaining mortgage minus ~6% selling costs) and deducts tax savings on mortgage interest and property taxes at your bracket. Then it adds opportunity cost: the investment growth your down payment would have earned as a renter.
How to use the Rent vs Buy Calculator
- Enter the home price and your current rent for a home you would actually consider buying.
- Set your loan terms: down payment, mortgage rate, loan term, and closing costs (3% is a safe default).
- Add the carrying costs: property tax rate, homeowner's insurance, maintenance (~1%/yr), and any HOA dues.
- Set the assumptions: rent growth, home appreciation, the return your down payment would earn invested, and your federal tax bracket (0% if you take the standard deduction).
- Choose your horizon — how long you expect to stay — and click Compare rent vs buy.
Tips for accurate results
- Stay under 3–5 years and renting usually wins: selling costs (~6%) wipe out early equity.
- High rent growth favors buying; high home appreciation does too, but it is the least predictable input.
- If you take the standard deduction, mortgage-interest tax savings vanish — set the bracket to 0%.
Frequently asked questions
How does the rent vs buy calculator work?
It totals the full cost of buying (down payment, closing costs, monthly mortgage, property tax, insurance, maintenance and HOA) minus your equity at the end, plus the opportunity cost of the down payment — then compares that to the total rent you would pay over the same period with annual rent increases.
What is the break-even point of renting vs buying?
The year where the total cost of buying drops below the total cost of renting. Upfront costs (down payment, closing, selling fees) make the early years expensive; as rent rises and the mortgage stays fixed, buying typically pulls ahead in 4–10 years.
What homeownership costs do people forget?
Maintenance (~1% of home value per year), closing costs (2–5% upfront), selling costs (~6% of the sale price), and the opportunity cost of the down payment — cash tied up in a house earns nothing unless the home appreciates.
Does the calculator include tax deductions?
Yes. Mortgage interest and property taxes are deducted at your federal bracket, lowering the effective cost of buying. If you take the standard deduction, set your bracket to 0%.