The rent-vs-buy question, finally answered with real math
Rent versus buy is the single most consequential financial decision most Americans ever make, and it's the one where the advice is the loudest, the most confident, and the most wrong. "Renting is throwing money away" is a slogan, not a calculation. "Buying is a scam" is equally glib. The truth is that the answer depends on five specific numbers, and once you have them, the math is unambiguous: at a specific month, buying costs less than renting. Before that month, it doesn't.
This calculator computes that specific month — the breakeven — using the inputs that actually matter: home price, mortgage rate, down payment, property tax rate, insurance, maintenance, HOA, expected home appreciation, current rent, rent inflation, and the opportunity cost of the capital you put down. Change any input and the breakeven shifts. The point isn't to produce a single verdict; it's to show you which lever matters most in your specific market.
Why the 'rent is throwing money away' argument is wrong
When you rent, you're paying for shelter. When you buy, you're also paying for shelter — just through different line items. Mortgage interest on a $360,000 loan at 6.75% is roughly $2,025 in the first month alone, and mortgage interest is as gone as rent. Property tax is gone. Insurance is gone. Maintenance is gone. HOA is gone. Only the principal portion of your mortgage payment — typically $310 in month one, rising to $1,500+ by year 20 — actually builds wealth.
Add it up on a $450,000 home with 20% down: about $3,100 a month in "gone money" (interest, taxes, insurance, maintenance) vs. $310 of principal paydown. If rent on an equivalent home is $2,400 a month, the renter is spending $700 lessin gone money each month, and they have $90,000 freed up that can compound in an index fund. The buyer's edge comes from leveraged appreciation — a 3.5% bump on a $450,000 home is $15,750 a year, which is roughly 17% on the $90,000 down payment. Whether that beats the renter's index fund is what breakeven math is about.
The breakeven curve — and why it bends where it does
Our chart shows cumulative net cost for buying and renting, year by year. Both lines slope up. The buy line starts high (because of the down payment and closing costs) and the rent line starts at zero. Over time the rent line catches up, partly because rent rises and partly because the buyer's home appreciates while their mortgage amortizes.
At some specific year, the two lines cross. That's your breakeven. Before that year, selling the house and counting the cash would leave you worse off than if you'd been renting all along. After that year, buying was the better move. The typical breakeven is somewhere between year 5 and year 9, and the lever that moves it most is the spread between home appreciation and your alternative investment return.
The five inputs that change everything
Mortgage rate. Every 1% of rate adds roughly $600/month to a $360,000 loan. Over 30 years, 1% is $216,000 in extra interest. When rates drop, the breakeven year comes sooner. When rates rise, breakeven drifts to year 8 or 9.
Home appreciation. The single biggest swing factor. At 5% annual appreciation, buying wins almost any market. At 1%, renting wins for most horizons. The long-run national average is 3.5–4%, but specific metros deviate massively — Austin, Tampa, and Boise have done 7%+ over the last decade while some Rust Belt cities are under 1%.
Rent inflation.If your rent is rising 6% a year and your mortgage is fixed, time is on the buyer's side. If rent is flat (rare, but some markets go years without increases), the renter has a huge durable advantage.
Opportunity cost of the down payment.Your down payment is not a sunk cost — it's capital that would have earned something if invested elsewhere. The S&P 500's long-run real return is about 7%. Plug 7% in and renting looks much better than the typical online calculator suggests (most of them use 3% or zero).
Time horizon.The single biggest predictor of the answer. If you'll be out in 3 years, don't buy. If you'll be there for 15, almost always buy. This calculator defaults to a 10-year horizon, which is the median actual stay in an owned home.
Hidden costs the calculator includes that others ignore
Closing costs on purchase.We assume 3% of price. For a $450,000 home, that's $13,500 on top of your down payment. Lender fees, title, recording, transfer taxes, prepaid escrow — it adds up faster than most buyers expect. See our closing cost calculator for a full breakdown.
Sale costs on exit.We assume 7% of future home value: 5–6% agent commission plus ~1% miscellaneous seller fees. If buyer agent commissions compress post-2024, that may drop to 5%, but don't count on it — your agent may require it in your listing contract.
Maintenance.Set at 1% by default, which is the long-run trailing average. Renters don't pay it directly. Buyers do. Over 30 years it adds up to about one full home price in total upkeep. Our HOA impact calculator shows how a condo with high HOA often shifts maintenance cost to the HOA rather than eliminating it.
Property tax appreciation.We recalculate property tax each year against the new home value, which is how most states operate (California's Prop 13 being a notable exception). Ignoring this understates buying cost by 10–15% over a decade.
Cases where the math changes sharply
Cheap condo with high HOA. A $250,000 condo with a $650/month HOA looks cheap, but the HOA compounds with no equity benefit. Breakeven often never happens in condo-heavy markets because HOAs eat the math. Use our HOA impact calculator to quantify.
VA or USDA zero-down.When you have no down payment, there's no opportunity cost to overcome. Breakeven often happens in year 2 or 3. See our VA loan calculator and USDA loan calculator for the specific math.
House-hacking duplex. Rent out a second unit and buying almost always wins immediately because someone else is paying most of your mortgage. Run the numbers in our house hacking ROI calculator.
Short stay (<3 years).Almost always rent. The round-trip transaction cost of buying (3% in, 7% out) is 10% of price — on a $450k home that's $45,000 that has to be recovered before you break even on anything.
The emotional factor — and why it's not fake
The math above is a net-present-value analysis, and it treats a home as a financial asset. Many people don't buy a home as a financial asset. They buy it for stability, for school district access, for the ability to paint a wall, for the psychological weight of ownership. A landlord who raises rent 8% and refuses to fix a leaky faucet has a real cost that doesn't show up in a spreadsheet.
If owning a home is worth $500/month to you in peace of mind, you should feel free to buy even when the math says rent is ahead by $300/month. Just don't confuse the two. When someone tells you renting is throwing money away, they're not doing math — they're selling you an emotional framing. The math is in this calculator. The feelings are yours to weigh separately.
How to use this calculator
Start with your actual target home price and your actual current rent. Use today's mortgage rate — not the headline 30-year fixed average, the rate youwould lock at based on your credit and loan type. For appreciation, use your metro's 10-year trailing average, not the national number. For maintenance, use 1% unless the home is under 10 years old (use 0.7%) or over 40 years old (use 1.5%).
The single most useful thing to do is change the horizon slider. Dragging from 3 years to 15 years usually shows you a dramatic shift. If buying still loses at year 15, you're looking at the wrong house. If buying wins at year 5, you have more flexibility than you thought. For the full picture on the buy side, follow up with our mortgage payment calculator and amortization schedule to see exactly how interest and principal evolve.