Rent vs Buy Calculator

Why "rent is throwing money away" is wrong — and so is "always buy."

There is no single answer to rent versus buy. There's only the answer for your scenario — your market, your time horizon, your alternative use of cash. The same $425K home is a great buy at a 10-year hold and a poor one at a 2-year hold, regardless of how the listing photos look.

This calculator runs the math both ways and adjusts for the things people consistently forget: rent inflation, opportunity cost of the down payment, the realistic cost of selling, and the difference between gross appreciation and what's actually in your pocket after closing on the other side.

Time horizon — the variable that matters most

Buying has front-loaded costs (down payment, closing) and back-loaded costs (selling commissions, concessions). Spread over enough years, equity buildup and appreciation cover those costs. Spread over too few years, they don't. The break-even point varies by market — it's commonly 4 to 7 years, but high-tax/high-fee markets can push it longer, and rapidly appreciating ones can shorten it dramatically.

Rent inflation

Rent rarely stays flat. National rent inflation has averaged 3–4% over the long run, with much higher spikes in supply-constrained markets and softer numbers in markets with new construction. A $2,650 rent at 3.5% annual inflation reaches $3,490 by year 7, $4,121 by year 10, and $4,841 by year 12. Lock that in mentally — the "renting is cheaper" comparison runs on today's rent, not the rent you'll be paying in five years.

Home appreciation

Long-run U.S. home appreciation has averaged roughly 3–4% nominally, with enormous regional variation. We default to 3% — a reasonable middle ground. Two cautions: (1) high-growth periods are often followed by flat ones, so don't extrapolate the last five years forward; (2) appreciation is calculated on the home value, not just on your equity — a 3% gain on a $425K home is $12,750, not 3% of your $85K down payment.

Opportunity cost of the down payment

If you put $85,000 into a home, that's $85,000 you didn't put into anything else. At a 6% expected return, that down payment would have grown to $113,800 invested over five years, $151,300 over ten. This calculator includes that opportunity cost as a real expense of buying — and as a real benefit of renting. If you would otherwise spend the down payment on something non-investing, lower the assumed return; if you'd put it in equities, 6–7% is typical.

Closing and selling costs

Buy-side closing costs run 2–5% of the loan: origination, title, escrow, appraisal, recording, prepaid items. We default to 3%. Sell-side closing has historically run 5–7% of the sale price (agent commissions, staging, concessions, title), though recent commission-structure changes are pushing some of these lower. We default to 6%. These two together — call it 9% of the home value lost on the round trip — are the single biggest reason short-horizon buyers lose money.

What the calculator can't model

Some things in this comparison aren't dollar-quantifiable. Owning gives you control of the property and a stable monthly cost (on a fixed-rate loan). Renting gives you flexibility and zero exposure to maintenance shocks or roof replacements. The right answer often depends on which of those matters more to you — and that's a judgment, not a calculation.