Compare the total cost of renting vs buying over your expected stay
This calculator compares the total cost of renting (monthly rent plus renters insurance, adjusted for annual increases) against the total cost of buying (mortgage payment, property tax, insurance, maintenance, and opportunity cost of the down payment) over a specified time period. It factors in home appreciation, tax deductions, and the investment returns you could earn by investing the down payment instead of buying.
| Buying costs | Renting costs |
|---|---|
| Mortgage payment (P&I) | Monthly rent |
| Property tax (1–2%/yr) | Renters insurance ($150–300/yr) |
| Homeowners insurance | — |
| Maintenance (1–2%/yr) | — |
| PMI (if <20% down) | — |
| Closing costs (2–5%) | Security deposit |
| Opportunity cost of down payment | — |
Buying typically becomes cheaper than renting after 5–7 years, though this varies dramatically by market. In high-cost cities with low rent-to-price ratios (like San Francisco or New York), the break-even point can be 10–15+ years. In markets where buying is cheap relative to renting, break-even can be as short as 2–3 years. If you plan to move before the break-even point, renting is usually the better financial choice.
The hidden cost of buying is opportunity cost. Your down payment could be invested in a diversified portfolio earning 7–10% annually. Maintenance, property tax, and insurance add 2–4% of the home's value per year to the cost of ownership — costs that do not exist for renters. Conversely, homeowners build equity with each mortgage payment and benefit from appreciation, while rent payments build no wealth.
No. Renting is often better if you plan to stay less than 5 years, if home prices are high relative to rents in your market, if you lack a sufficient down payment, or if you want flexibility to relocate. The financial answer depends heavily on local market conditions and personal circumstances.
Beyond the mortgage, expect to pay 2–4% of the home's value annually in property tax (1–2%), insurance (0.3–0.5%), and maintenance (1–2%). On a $400,000 home, that is $8,000–$16,000 per year in non-mortgage costs.
Historically, US home prices have appreciated 3–4% annually. With leverage (a mortgage), even modest appreciation generates strong returns on your down payment. However, appreciation varies widely by location and is not guaranteed — some markets experience flat or declining prices for years.
Timing the housing market is extremely difficult. If you are financially ready and plan to stay 7+ years, buying at current prices and rates is generally better than waiting for a dip that may not come. Rising rents during the waiting period also add to the cost of waiting.
Mortgage interest and property taxes are deductible, but only if you itemise deductions. With the standard deduction at $14,600 (single) and $29,200 (married, 2024), many homeowners do not benefit from itemising. The tax advantage of homeownership is smaller than commonly assumed.