Should you rent or buy?
The rent vs. buy decision is one of the most consequential financial choices most people make. Buying a home isn't automatically the better financial decision — it depends on how long you stay, local appreciation rates, what you'd do with the down payment otherwise, and dozens of other factors. This calculator models all of them.
The key insight is the break-even year — the point at which cumulative buying costs fall below cumulative renting costs. If you plan to stay longer than the break-even, buying is likely the better financial move. If you might move sooner, renting may be smarter.
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Frequently Asked Questions
Is buying always better than renting long-term?
Not necessarily. In high price-to-rent ratio markets (like San Francisco or New York), renting and investing the difference can outperform buying even over 20+ years. The outcome depends heavily on local appreciation rates, your investment return on the down payment, and transaction costs. This calculator lets you model your specific situation rather than relying on generalizations.
What is a typical break-even period?
In most U.S. markets, the break-even point falls between 4 and 7 years. In expensive coastal cities with high transaction costs and slower appreciation, it can stretch to 10+ years. In lower price-to-rent markets in the Midwest and South, it can be as short as 2–3 years.
What is opportunity cost of a down payment?
When you put $80,000 into a down payment, that money can no longer be invested elsewhere. The opportunity cost is what that $80,000 would have grown to in a stock market index fund, for example. This calculator models that compounding growth annually — it's often the largest hidden cost of homeownership that people overlook.
Should I factor in the mortgage interest tax deduction?
Only if you itemize deductions. After the 2017 Tax Cuts and Jobs Act raised the standard deduction significantly, fewer than 10% of taxpayers now itemize. If your total itemized deductions (including mortgage interest, state taxes, and charitable contributions) don't exceed the standard deduction ($14,600 single / $29,200 married in 2024), the deduction has no practical value. Enter 0% in the marginal rate field if this applies to you.
Why is principal repayment excluded from the net buy cost?
Principal payments build equity — they're not a cost, they're a transfer of wealth into your home. When you sell, you get that equity back. Including principal in the cost column would double-count it, since appreciation gain already captures the full home value. Only interest, taxes, fees, and opportunity costs are true economic costs of ownership.