Comparing the real cost of each
Monthly rent vs. monthly mortgage isn't a fair comparison. Buying has upfront costs (down payment and closing costs), ongoing costs (property tax, insurance, maintenance) and selling costs. But you also build equity and may gain from rising home values.
This calculator adds up everything you'd spend either way, subtracts the equity you'd walk away with after selling costs, and counts what your down payment could have earned if you invested it instead.
What is the break-even point?
It's how many years you need to stay before buying becomes cheaper than renting. In the early years, closing costs and interest-heavy payments favor renting. The longer you stay, the more buying tends to win. If you might move within a few years, renting is often the better choice.
Key assumptions to test
- Home value growth and rent increases
- How long you'll stay
- Your mortgage rate
- What you'd earn investing instead
Frequently asked questions
How long do I need to stay to make buying worth it?
Often 5 to 7 years, but it depends heavily on prices, rates, rent and appreciation in your area. The calculator shows your break-even point with your own numbers.
Do I pay tax when I sell my home?
If you owned and lived in the home for at least 2 of the last 5 years, you can usually exclude up to $250,000 of gain ($500,000 married filing jointly) from tax.
Does this include the mortgage interest deduction?
No. Most homeowners now take the standard deduction, so we left tax benefits out to keep the comparison conservative. Use the mortgage interest deduction calculator to see if itemizing helps you.