What's a realistic home appreciation rate to use?

Long-run US home appreciation has historically averaged a few percent annually, but it varies enormously by market and time period — use a conservative figure and try a couple of alternatives rather than trusting one number.

Why does the investment return rate affect a buying decision?

Because the down payment is real money — if you didn't spend it on a home, it could be invested elsewhere. Crediting that opportunity cost to the renter is what separates a serious rent-vs-buy comparison from just comparing a mortgage payment to a rent check.

What counts as 'selling costs'?

Mainly real-estate agent commission (often the largest piece) plus closing costs on the sale — commonly modeled around 6-8% of the sale price combined, though it varies by market and negotiation.

Is the break-even year exact?

No — it depends entirely on the assumptions you enter, especially appreciation, rent growth, and investment return, all of which are genuinely uncertain over multi-year horizons. Treat it as a planning estimate, not a prediction.

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Finance

Rent vs. Buy Calculator

Compare the total cost of renting and buying over time.

🔒 Runs entirely in your browser — nothing here is ever uploaded

Last reviewed 2026-08-25

About the Rent vs. Buy Calculator

Compares the total financial cost of renting versus buying an equivalent home over a chosen time horizon — factoring in the opportunity cost of the money tied up in a down payment, not just the monthly payment difference.

How to use it

Enter the Home price, Down payment, and Mortgage rate and term.
Enter the ongoing ownership costs: property tax, insurance, and maintenance, each as a percentage of home value per year.
Enter the Home appreciation rate you expect, plus the equivalent Monthly rent and its annual growth.
Enter the return you could earn if you invested the down payment instead, and the selling costs you'd pay if you sold.
Set how many Years to compare, then read which option is cheaper and the break-even year.

Formula

Net cost of buying = all cash paid (down payment + monthly principal & interest + tax + insurance + maintenance) − net sale proceeds (home value − remaining loan balance − selling costs) at the chosen horizon

Net cost of renting = total rent paid − the future value of the down payment if it had been invested instead

Whichever net cost is lower is the cheaper option over that horizon. This opportunity-cost framing — crediting the buyer with home equity but crediting the renter with investment growth on the money they didn't tie up — is the same approach the CFPB points to when it notes that many mortgage calculators only account for principal and interest, missing tax, insurance, maintenance, and what the down payment could otherwise have earned.

Worked example

A $400,000 home with a $80,000 down payment, compared against $2,200/month rent over 7 years at the tool's default assumptions, comes out roughly $72,600 cheaper to rent — mainly because a 7-year horizon isn't long enough for built-up equity and appreciation to overtake the down payment's opportunity cost at a 7% investment return. Stretch the horizon or raise the appreciation assumption a point or two and that gap narrows fast, which is the real lesson of this kind of comparison.

Recommendations

• The investment-return assumption for the down payment matters more than most people expect — try 5% and 9% back to back and watch the answer change.
• A shorter time horizon usually favors renting, since buying's upfront and selling costs get spread over less time.
• Maintenance is easy to underestimate — 1% of home value per year is a common planning figure, but older homes often run higher.
• This compares financial cost only — it doesn't weigh stability, the ability to renovate, or the risk of a landlord not renewing a lease.

Frequently asked questions

Because buying also has costs that don't build equity — mortgage interest, tax, insurance, maintenance, and selling costs — and the down payment could otherwise have been invested. This calculator nets all of that out on both sides rather than assuming buying always wins.