Rent vs Buy Calculator

"Renting is throwing money away" is too simple Both renting and buying cost money — the real question is which costs *less* for your situation and timeline. With the **median U.S. home around $417,800** and **median rent near $2,000**, the stakes are big. This calculator replaces gut feelings with a side-by-side cost comparison that includes the one factor most calculators ignore: opportunity cost.

The hidden cost of a down payment When you buy, your down payment and closing costs are **tied up in the house**. A renter can invest that same cash. That's the **opportunity cost** — and it's why this tool lets you choose what your money could earn instead (**4%, 6%, 8%, or 10%**). At an 8% return, a $80,000 down payment forgoes over **$6,000 in the first year alone**. Ignoring this makes buying look better than it is.

What buying really costs Beyond mortgage principal and interest, owners pay **property tax**, insurance, and maintenance of roughly **1–2% of the home's value per year**. Add one-time **closing costs (2–5%)** to buy and **6–10% selling costs** later. Early in a mortgage most of your payment is interest, so equity builds slowly — sell too soon and transaction costs erase your gains.

The break-even point The break-even is how many years you must stay for buying to beat renting after all costs. Buy and sell within a couple of years and you'll likely lose; stay long enough and equity plus appreciation (historically **~4.8%/year**) overtake renting. For most situations the break-even lands at **5–7 years** — the origin of the "only buy if you'll stay 5+ years" rule.

PMI, rates, and taxes A down payment under **20%** triggers **PMI** (private mortgage insurance) — an extra monthly fee that protects the lender, not you. Your **mortgage rate** has an outsized effect: even one point changes 30-year interest dramatically. Property tax rates vary widely and can make a cheap home expensive to hold.

Can you even afford it? Affordability is separate from the rent-vs-buy math. Keep your total housing payment within about **28% of gross income**, and all debt under **36%**. Stretch past that and you become "house poor." **FHA loans** allow 3.5% down with lower credit; conventional loans let you drop PMI at 20% equity.