How to use this calculator
Enter your current monthly rent, the home price you'd consider buying, your down payment, and the mortgage rate you'd qualify for. Then enter your expected hold period (how long you'd stay in the home before selling) and assumptions for home appreciation, rent growth, and the return you'd earn on alternative investments if you kept the down payment in the market instead of buying. The calculator runs both scenarios — keep renting + invest the difference, or buy + build equity — and compares net wealth at the end of your hold period. It accounts for closing costs at purchase and sale, ongoing property maintenance (typically 1–2% of home value annually), homeowners insurance, property taxes, mortgage interest, and the foregone investment return on cash tied up in down payment and equity. The output is a clear winner over your specified hold period — buying typically wins beyond ~5 years, renting wins for shorter holds.
How the math works
The buy scenario tracks: home equity at sale = (sale price after appreciation) − (remaining loan balance) − (sale closing costs, typically 6–8% of sale price). Annual costs include mortgage P&I, property taxes, insurance, maintenance, and HOA. The rent scenario tracks: cumulative rent paid (with annual rent growth, typically around 3%) and the investment value of your initial down payment + monthly housing-cost differences (rent vs ownership cost) compounded at the assumed investment return (the long-term S&P average sits around 7%). Worked structure: enter the home price, down payment, today's rate (from the mortgage rates page), current rent, expected hold period, home appreciation rate, rent growth rate, and assumed investment return. The calculator computes home equity at sale (after appreciation, principal paydown, and sale costs) for the buy scenario and the compounded investment value of preserved cash plus cumulative rent for the rent scenario. The output is a clear net-wealth comparison at the end of your specified hold period. Most markets break even on buy vs rent at 5–7 years; shorter holds favor renting because of transaction-cost amortization.
When to use this vs the others
Use this calculator when you're weighing whether buying makes sense at all relative to continuing to rent. It's the right starting tool for first-time buyers, anyone planning to relocate within 3–5 years, and people in markets where rent feels low relative to home prices. Once you've decided to buy, switch to the affordability calculator to set a price ceiling, then the mortgage payment calculator to model PITI on a specific home.
Frequently asked questions
What's the typical break-even hold period for buying vs renting?
5–7 years in most markets, when transaction costs (closing costs at purchase and sale, typically 8–10% combined) get amortized over time. Below 5 years, the friction costs usually swamp the equity-building benefit. Markets with very high rent or rapid appreciation can break even sooner; markets with low rent and slow appreciation can take 10+ years.
How do I estimate home appreciation?
Long-term U.S. average is 3–4% annually, roughly matching inflation. The FHFA House Price Index publishes appreciation by metro area and by state — useful for setting a regional benchmark. Don't extrapolate from recent 5-year boom periods (2020–2022) into long-term projections.
What's a reasonable maintenance assumption?
1–2% of home value per year, including HVAC service, roof reserve, landscaping, plumbing/electrical, and small repairs. Older homes trend toward 2%; newer construction can run closer to 1%. Don't underestimate — deferred maintenance compounds.
Should I include opportunity cost of the down payment?
Yes — it's the single biggest factor in long-term rent vs buy math. If you have $80,000 down and would otherwise invest it at ~7% return (long-term S&P average), that's $5,600/year in foregone investment income that should count against the buy scenario. The calculator includes this by default.
Does this account for tax benefits of homeownership?
It accounts for mortgage interest deductibility (subject to standard caps) and property tax deductibility (subject to SALT cap). For most borrowers under the post-2017 standard deduction, the actual tax benefit is smaller than commonly assumed. Don't overweight this in your decision.