Buy vs. Rent
Deciding whether to buy or rent a home isn’t easy. Prices, mortgage rates, rent inflation, and hidden costs all play a role. Most calculators overwhelm users with too many inputs—we simplify the process.
Our Buy vs. Rent Calculator gives you a clear “breakeven period”—how long you’d need to stay in a home before buying makes more financial sense than renting. You can select whether you want to view the breakeven as a function of cash (money in your account), equity (unrealized gains due to home price appreciation), tax (potential deductions of mortgage interest and property taxes) and/or sale (realized gain/loss considering costs of selling).
While market conditions will vary, our model uses real-world assumptions to provide a data-driven estimate for educational purposes. Actual results may vary depending on the market environment, particularly that of home prices. You can choose to take our best efforts assumptions or average historical rates of change (inflation, home price growth, market returns, etc..).
Items we consider
Annual rent growth – How much your rent increases each year if you continue to rent.
Sunk costs of renting – Every rent check is money you won't get back.
Opportunity cost of downpayment and market return– If you instead saved your down payment, it would earn a return in the market. You are forgoing that market/savings return for a return on the property.
Sunk costs of a mortgage – The portion of your monthly payment that is a lost cost (interest).
Sunk costs of homeownership – Non-equity enhancing costs of ownership (regular maintenance), HOA, property taxes, initial closing costs, PMI, and insurance.
Home price appreciation – How much equity you're building over time (and the impact of appreciation on property taxes).
Tax deduction benefits – Mortgage interest expense and property taxes may be deductible, but only if they exceed the standard deduction. See more in the Mortgage Interest and Tax Deduction section.
Inflation rate - Items like utilities, HOA, property taxes, and insurance are all subject to price increases over time.
Tax policy - The opportunity cost of a down payment and deduction factors all have tax policy implications. We discount market returns for average tax rates and assume current policy forward for deduction purposes.
Cost of sale - Expenses related to selling a property (agent commissions, closing fees).
Putting buy vs. rent incomp
Paste a listing – Submit the property you want to compare.
Input current rent – Use your current rent (if the property is in the same area) or market rent that you would otherwise pay in that location (if moving to that area anyway). We adjust for future rent increases, but we do not assume 'upgrading' of your accommodations. If you plan to rent a more expensive property in the future, keep this in mind when inputting your 'current' rent.
Input income and tax filing status (optional) – This improves the cost estimates based on potential tax deductions (mortgage interest and property tax deduction). We do not include the full benefit of the deduction, only the benefit that exceeds the standard deduction of your filing status (single, married). For example,, if the standard deduction for a married couple is $29,200, we would not include a benefit if your deductions were lower than this figure. If you were to save $34,200 by itemizing deductions, we would include a net benefit of $5,000 for that year to your costs.
Closing cost at sale (optional) – Adding this extends the breakeven period as you incur a sunk cost at sale. If you plan to remain in this home for the long term with no intention to sell, leave this field unselected.
Notes
US tax policy is complex and everyone's situation is different. We provide estimates on a best efforts basis, but it is important to verify your unique situation with a tax professional. Although we may collect email or other contact information, we do not save personal financial information input to individual users. You cannot save sensitive financial information to your account and must manually input for each search. We do this to maintain user privacy. Our estimates are modest in nature and actual results may vary. Significant home price appreciation or depreciation can have a significant impact on actual results. These estimates are for educational purposes only. For more information, please visit our terms and conditions.