Why this calculator is different
Most rent vs. buy calculators are owned by companies whose business depends on you buying. Zillow, Redfin, and most real estate sites bury the variables that favor renting. The result is calculators that consistently say "buy" even when the math actually favors renting.
This one is different in three specific ways:
1. We show the down payment opportunity cost
A $100,000 down payment is not "free money you would otherwise spend." It's capital you could invest in the stock market. At 7% annual return (S&P 500 historical average), $100,000 grows to $197,000 in 10 years and $387,000 in 20 years. That growth is what you give up by tying the money into home equity.
Home equity does grow too — through appreciation and principal paydown. But typical home appreciation is 3% per year, which is less than half the long-term stock market return. The math has to account for both sides honestly.
2. We use realistic maintenance
Industry rule of thumb is 1% to 2% of home value per year for ongoing maintenance and eventual replacement (roof, HVAC, water heater, appliances, paint, flooring, etc.). Most calculators default to 0.5% or 1%. We default to 1.5%, which lines up with Bureau of Labor Statistics data on actual homeowner maintenance spending.
On a $500,000 home over 10 years, the difference between 0.5% maintenance and 1.5% maintenance is $50,000. That's the size of the bias most calculators carry.
3. We surface the break-even point honestly
The chart in the results section shows when buying overtakes renting (if ever). Most buy-vs-rent calculators give you a single answer for one hold period. The reality is that the answer changes dramatically based on how long you stay.
In a 6-7% interest rate environment, break-even is often year 8 to year 12. If there's any chance you'll move sooner, the calculator will show you that and recommend renting.
When buying usually wins
Buying tends to be the right answer when:
- You plan to stay 10+ years (long enough to outrun transaction costs and let appreciation compound)
- Mortgage rates are below 5% (which makes the monthly cost competitive with renting from day one)
- Rent in your area is rising fast (4%+ annually) while home appreciation is stable (3%+)
- You'd be a renter in the same neighborhood for the same property type (apples-to-apples)
- You have additional savings beyond the down payment for a real emergency fund
When renting usually wins
Renting tends to be the right answer when:
- You might move within 5 years (transaction costs alone can be 10%+ of home price)
- Mortgage rates are 7%+ (most early payments are interest, equity grows slowly)
- You'd invest the down payment difference in the stock market (and actually do it)
- Your local rent-to-price ratio is favorable (annual rent is less than 3% of home price)
- You value flexibility and lower monthly housing costs more than building home equity
The variables that matter most
In our testing, the three variables that move the answer the most are:
- Hold period. The most under-considered variable. People assume they'll stay 10 years, average actual hold is closer to 7. Run the calculator with both numbers and see how much the answer changes.
- Mortgage rate. A 1 percentage point change in rate moves break-even by 2-3 years. At 4%, break-even is often year 5-6. At 7%, it's year 9-12.
- Investment return assumption. If you assume 7% on the down payment, renting wins more scenarios. If you assume 4%, buying wins more. The right answer depends on what you'd actually do with the money.
The calculator above lets you adjust all three. We recommend running it three times: with your "expected" hold period, with a shorter realistic hold (e.g., 5 years), and with a longer one (e.g., 12 years). If the answer flips between scenarios, hold period is your dominant uncertainty.
Honest disclosures about the math
We make a few simplifying assumptions worth knowing:
- Property tax is not added to the deductible amount. Most middle-income borrowers in high-tax states have already used up the $10,000 SALT cap with state income tax, so property tax provides no additional federal tax benefit. We don't add it. (If you're in a no-state-income-tax state and your property tax is under $10,000, you may get more tax benefit than we show. The understatement is small relative to the other variables.)
- Investment return is nominal, not real. 7% includes inflation. We compare to nominal home appreciation of 3%. Both sides are nominal, so the comparison is fair.
- We assume you actually invest the difference if renting. If you'd spend the down payment money instead, renting loses to buying every time. Buying is, in part, a forced savings tool. The calculator shows what's possible if you have the discipline to invest.
- Selling costs are 6% of sale price. Realtor commissions (5-6%), transfer taxes, staging, minor repairs. Some sellers pay less, some pay more.
Full methodology and formulas are in our calculation methodology page.