How this rent vs buy calculator works
Buying a home builds equity: every mortgage payment chips away at the loan, and if the home appreciates, that gain is yours. But ownership comes with large one-time transaction costs — closing fees when you buy and agent fees when you sell — plus ongoing property tax, insurance and maintenance that never build equity.
Renting, by contrast, frees up your capital. The money a buyer would tie up in a down payment and closing costs can instead be invested. Over a long horizon that invested sum can grow substantially, which is the opportunity cost that makes renting more competitive than a simple "rent is throwing money away" comparison suggests.
Which wins comes down to how long you stay. Because buying's up-front costs are spread over more years the longer you own, the math usually tilts toward buying the longer your horizon. We model each year — growing rent, growing home value, ownership costs and the renter's invested savings — then compare the net cost of each at your chosen year. Full assumptions are on our methodology page. This is education, not advice.
Frequently asked questions
- Is it cheaper to rent or buy?
- It depends on your numbers and how long you stay. Buying carries big transaction and carrying costs but builds equity and benefits from appreciation; renting keeps your capital free to invest. This tool compares the net cost of each over your horizon so you can see which is lower for you.
- How long do I need to stay for buying to pay off?
- Because buying has large up-front costs, it usually takes several years before equity and appreciation outweigh them. The break-even year above is the first year buying's cumulative net cost drops below renting's. Generally, the longer you stay, the better buying looks.
- Does this store my numbers?
- No. Everything runs in your browser. Nothing you type is uploaded or saved on a server.