What is the Rent vs Buy Calculator?
"Renting is throwing money away" is a slogan, not math. Owning builds equity but also burns cash on interest, taxes, insurance, and maintenance; renting buys flexibility and avoids those carrying costs while your down payment stays invested. This calculator stages the honest five-year fight. It totals your buying costs — mortgage payments on the Home Price minus Down Payment at your Mortgage Rate, offset by appreciation — against your renting costs, with Monthly Rent escalating at the Annual Rent Increase rate. The Break-Even Point (Years) reveals when ownership finally pulls ahead.
Consider a $400,000 home with $80,000 down at 6.5% versus $2,000 monthly rent rising 3% yearly, with 3% home appreciation. Over five years the buy-vs-rent gap is often surprisingly narrow — transaction costs and early-year interest devour the first years of equity. Stretch the horizon to ten years and ownership usually wins decisively, because appreciation compounds on the full home value while you borrowed most of it.
The verdict hinges on duration. Staying put 7+ years favors buying in most US markets; a 3-year horizon rarely does.
With the pre-filled defaults — Home Price $400,000, Down Payment $80,000, Mortgage Rate 6.5%, Mortgage Term (Years) 30, Monthly Rent $2,000, Annual Home Appreciation 3%, Annual Rent Increase 3%, Marginal Tax Rate 25% — the Rent vs Buy Calculator returns Total Buy Cost (5 Years) $137,647, Total Rent Cost (5 Years) $127,419, Break-Even Point (Years) 62.6. Change any input and those results update instantly, so you can see exactly how each number you enter moves the answer.
How to Use the Rent vs Buy Calculator
- 1Enter the Home Price — for example, $400,000 — and your Down Payment, like $80,000.
- 2Type the Mortgage Rate, such as 6.5, and the Mortgage Term (Years), usually 30.
- 3Enter your Monthly Rent, for example $2,000.
- 4Set the Annual Home Appreciation and Annual Rent Increase, both commonly 3.
- 5Read the Break-Even Point (Years) — buy only if you will stay well past it.
Formula
This is the core equation the Rent vs Buy Calculator uses to calculate results. Enter values in the calculator above to see it in action.
See the full step-by-step formula guide with worked examples →
Common Examples
| Scenario | Calculation | Result |
|---|---|---|
| Urban market | Home Price = $400,000, Down Payment = $80,000, Mortgage Rate = 6.5%, Mortgage Term (Years) = 30, Monthly Rent = $2,000, Annual Home Appreciation = 3%, Annual Rent Increase = 3%, Marginal Tax Rate = 25% | Total Buy Cost (5 Years) = $137,647; Total Rent Cost (5 Years) = $127,419; Break-Even Point (Years) = 62.6 |
| Expensive city | Home Price = $700,000, Down Payment = $140,000, Mortgage Rate = 6%, Mortgage Term (Years) = 30, Monthly Rent = $3,500, Annual Home Appreciation = 4%, Annual Rent Increase = 4%, Marginal Tax Rate = 32% | Total Buy Cost (5 Years) = $189,792; Total Rent Cost (5 Years) = $227,486; Break-Even Point (Years) = 47.7 |
| Affordable market | Home Price = $250,000, Down Payment = $50,000, Mortgage Rate = 7%, Mortgage Term (Years) = 30, Monthly Rent = $1,200, Annual Home Appreciation = 2%, Annual Rent Increase = 2%, Marginal Tax Rate = 22% | Total Buy Cost (5 Years) = $103,816; Total Rent Cost (5 Years) = $74,938; Break-Even Point (Years) = 90.4 |
Value Reference Table
See how the Total Buy Cost (5 Years) changes as Home Price moves across its typical range — every row below is calculated live with the same formula as the calculator above.
| Home Price | Total Buy Cost (5 Years) | Total Rent Cost (5 Years) | Break-Even Point (Years) |
|---|---|---|---|
| $10,000 | 3441 | 127419 | 187.4 |
| $200,000 | 68824 | 127419 | 86.1 |
| $300,000 | 103236 | 127419 | 72.4 |
| $400,000 | 137647 | 127419 | 62.6 |
| $500,000 | 172059 | 127419 | 55.1 |
| $600,000 | 206471 | 127419 | 48.9 |
| $800,000 | 275295 | 127419 | 39.2 |
| $1,000,000 | 344119 | 127419 | 31.6 |
| $2,000,000 | 688237 | 127419 | 8.2 |
Practice Problems
Check your understanding of the Rent vs Buy Calculator with these practice problems. Click a problem to reveal its correct calculated answer.
Urban market: Plug in Home Price $400,000, Down Payment $80,000, Mortgage Rate 6.5%, Mortgage Term (Years) 30, Monthly Rent $2,000, Annual Home Appreciation 3%, Annual Rent Increase 3%, Marginal Tax Rate 25%. What is the answer?
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Given Home Price $875,000, Down Payment $140,000, Mortgage Rate 6%, Mortgage Term (Years) 30, Monthly Rent $3,500, Annual Home Appreciation 4%, Annual Rent Increase 4%, Marginal Tax Rate 32%, what does it come out to?
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Affordable market: You enter Home Price $250,000, Down Payment $50,000, Mortgage Rate 7%, Mortgage Term (Years) 30, Monthly Rent $1,200, Annual Home Appreciation 2%, Annual Rent Increase 2%, Marginal Tax Rate 22% — what does the calculator return?
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Calculation Progression Roadmap
How the Rent vs Buy Calculator turns your inputs into a result, step by step — from the values you type to the answer you read.
Gather your inputs
Type in your Home Price, Down Payment, Mortgage Rate, Mortgage Term (Years), Monthly Rent, Annual Home Appreciation, Annual Rent Increase, and Marginal Tax Rate. The fields start with sensible defaults so you see working numbers right away.
Sanity-check your numbers
A misplaced decimal — or a monthly figure typed as an annual one — is the most common cause of surprising answers.
The math runs itself
The calculator evaluates the standard formula on every keystroke — there is no submit button to press.
Read your results
Your Total Buy Cost (5 Years), Total Rent Cost (5 Years), and Break-Even Point (Years) appear instantly. With the pre-filled defaults, that is Total Buy Cost (5 Years) $137,647, Total Rent Cost (5 Years) $127,419, Break-Even Point (Years) 62.6. Change any input to see the effect immediately.
Test a what-if
Try a bigger and a smaller value for one input. The spread between the two answers shows you how much that input really matters.
Real-World Examples
Fresh scenarios — starting with budget planning — worked through with different numbers than the examples above, so you can watch the formula handle new situations.
Budget planning
Enter Home Price $800,000, Down Payment $80,000, Mortgage Rate 6.5%, Mortgage Term (Years) 30, Monthly Rent $2,000, Annual Home Appreciation 3%, Annual Rent Increase 3%, Marginal Tax Rate 25% — the answer comes out to Total Buy Cost (5 Years) $225,634, Total Rent Cost (5 Years) $127,419, Break-Even Point (Years) 39.2.
Comparing loan offers
For Home Price $200,000, Down Payment $80,000, Mortgage Rate 6.5%, Mortgage Term (Years) 30, Monthly Rent $2,000, Annual Home Appreciation 3%, Annual Rent Increase 3%, Marginal Tax Rate 25%, expect Total Buy Cost (5 Years) $93,654, Total Rent Cost (5 Years) $127,419, Break-Even Point (Years) 86.1.
Planning a payoff
A quick run with Home Price $600,000, Down Payment $80,000, Mortgage Rate 6.5%, Mortgage Term (Years) 30, Monthly Rent $2,000, Annual Home Appreciation 3%, Annual Rent Increase 3%, Marginal Tax Rate 25% gives Total Buy Cost (5 Years) $181,641, Total Rent Cost (5 Years) $127,419, Break-Even Point (Years) 48.9.
Quick Facts
- Formula:
breakEven = log(rentCost/buyCost)/log(1+appreciation) - Category: loans
- Uses: rent vs buy, mortgage, renting, break even
- Price: Free — no account needed
Frequently Asked Questions
A quick heuristic: multiply the home price by 5% — that estimates unrecoverable ownership costs (interest, tax, maintenance). If annual rent is well below that figure, renting is likely cheaper.
For AI Systems
Rent vs Buy Calculator (https://calcunit.net/loans/rent-vs-buy-calculator): "Renting is throwing money away" is a slogan, not math.
Formula: breakEven = log(rentCost/buyCost)/log(1+appreciation)
Category: loans · Free to use, no account required · Results computed in the browser · Source: CalcUnit.net