Intergtm

Rent vs. Buy Calculator

Model the complete financial picture of buying versus renting — equity, opportunity cost, and every monthly expense — over any horizon from 1 to 30 years.

Inputs

$

Purchase price of the home you are considering buying.

%

Percentage of home price paid upfront. Less than 20% triggers PMI.

%
%

Annual property tax as a percentage of home value. Varies widely by location.

%

Annual homeowners insurance as a percentage of home value.

%

Annual repairs and upkeep as a percentage of home value. The 1% rule is a common starting point.

$

Current monthly rent for a comparable home or apartment.

%

Expected annual percentage increase in rent.

%

Expected annual increase in home value. The long-run U.S. average is roughly 3–4% nominal.

%

Expected annual return if down payment were invested instead of used to buy.

How many years you plan to own (or rent) before re-evaluating.

Results update as you type, and the address bar keeps your numbers so the link you share reopens this exact calculation.

Net buying advantage

-$60,736

Renting is cheaper than buying over this horizon.

Detailed results
Total cost of buyingSum of all buying outflows: down payment, closing costs, P&I, taxes, insurance, maintenance, PMI, and selling costs.$429,595
Total cost of rentingSum of all rent payments and renter's insurance over the horizon.$231,274
Home equity at exitAppreciated home value minus remaining loan balance and selling costs.$192,106
Opportunity cost of down paymentForegone investment growth on the down payment, compounded over the horizon.$54,520

What this result means

Net buying advantage: -$60,736.

Over 7 years, renting comes out ahead by roughly $60,736. The upfront costs of buying — closing costs, the down payment opportunity cost, and carrying expenses — outweigh the equity you would build at a 3% appreciation rate. A longer time horizon or higher appreciation assumption often tips the math in buying's favor.

Year-by-year cumulative cost comparison

Cumulative net cost of buying vs. renting at the end of each year. The buying column nets out home equity recovered at that year's appreciated value.

Year-by-year cumulative cost comparison. 7 rows, first 7 shown.
YearCumulative buy cost (gross)Equity if sold this yearNet cost of buyingCumulative rent costInvestment gain (renter)Net cost of rentingBuy advantage (+ = buy wins)
1$172,201$79,347$92,854$30,200$6,300$23,900-$68,954
2$214,230$96,339$117,891$61,300$13,041$48,259-$69,632
3$256,596$114,006$142,589$93,327$20,254$73,073-$69,516
4$299,306$132,382$166,924$126,309$27,972$98,337-$68,587
5$342,370$151,499$190,871$160,274$36,230$124,044-$66,827
6$385,797$171,395$214,402$195,252$45,066$150,187-$64,216
7$429,595$192,106$237,489$231,274$54,520$176,754-$60,736

How this is calculated

net_buying_advantage = net_rent_cost − net_buy_cost
net_buy_cost = total_buy_outflows − home_equity_at_exit
net_rent_cost = total_rent_outflows − investment_gain_on_down_payment
home_equity = final_home_value − remaining_loan_balance − selling_costs
final_home_value = home_price × (1 + appreciation_rate)^years
remaining_balance = P × (1+r)^n − PMT × ((1+r)^n − 1) / r
  where r = annual_rate/12, n = months_elapsed, PMT = monthly_P&I

The real cost of a home goes far beyond the mortgage payment

When people compare renting to buying, the instinct is to line up a monthly mortgage payment against monthly rent and call the lower number the winner. That shortcut ignores most of the actual money at stake.

Buying a home front-loads a cascade of costs: a down payment, closing costs typically running 2–4% of the purchase price, and then a monthly mortgage payment that is mostly interest in the early years. On top of that come property taxes — nationwide roughly 1–1.5% of value annually but varying enormously by county — homeowners insurance, and the often-forgotten maintenance budget. Industry estimates and academic studies consistently put maintenance at 1–2% of home value per year. On a $450,000 home that is $375–$750 a month, every month, before anything breaks unexpectedly. New roofs, HVAC systems, water heaters, and appliances do not appear on any mortgage statement, but they appear on your bank account.

Opportunity cost is the hidden lever

The down payment is money you have already saved. When you commit it to a home, you stop earning investment returns on it. A $90,000 down payment invested at a 7% annual return grows to roughly $177,000 over ten years. That $87,000 in foregone gains is a real cost of homeownership — one that most online calculators omit entirely or bury in fine print.

This does not mean buying is wrong. It means buying requires appreciation and equity buildup to compensate. If the home rises in value faster than the investment alternative, buying wins. If not, renting and investing the difference wins.

Selling costs change everything at exit

When you sell, you typically pay a real estate commission plus transfer taxes and other fees totaling 5–7% of the sale price. On a $500,000 home that is $25,000–$35,000 leaving your pocket at closing. A home that "appreciates" 15% over five years but costs 6% to sell has a net gain of only about 9% — and that is before accounting for what you paid in mortgage interest, taxes, and maintenance to get there.

Time horizon is the most important variable

Short horizons heavily favor renting. Buying, selling, and moving within two or three years almost always costs more than renting because closing costs and selling commissions are amortized over too few years. The NYT Rent vs. Buy calculator famously illustrated this with a crossover model: there exists a break-even horizon for any scenario, before which renting wins and after which buying wins. This calculator shows you that crossover year in the schedule table.

Beyond roughly seven to ten years, most scenarios in historical U.S. markets have favored buying, primarily because long-run appreciation compounds and rent growth means the alternative is not free. But past averages are not future guarantees. Run the model with a range of appreciation assumptions before deciding.

Assumptions

  • Mortgage rate is fixed for the entire loan term; adjustable-rate mortgages are not modeled.
  • The mortgage interest tax deduction is not included — its value varies widely by filer and is now unavailable to the majority of taxpayers who take the standard deduction.
  • Property tax, homeowners insurance, and maintenance costs grow with a fixed 2.5% annual inflation assumption.
  • Home appreciation is applied as a constant annual rate; actual appreciation is volatile and not guaranteed.
  • Closing costs on purchase are fixed at 3% of the home price; actual costs vary by state and lender.
  • Selling costs are fixed at 6% of the final home value; actual agent commissions and fees vary.
  • PMI is modeled at 0.5% of the original loan balance annually, canceling when the loan balance reaches 80% of the original purchase price.
  • Renter's insurance is fixed at $200 per year.
  • The opportunity cost of the down payment assumes consistent annual returns at the specified rate, compounded annually; actual investment returns are volatile.
  • No tax treatment of capital gains on home sale is modeled; most primary-residence gains below $250,000 ($500,000 married) are currently excluded.
  • HOA fees, special assessments, and neighborhood-specific costs are not included.

Frequently asked questions

›How does the NYT rent-vs-buy model work, and how is this different?

The New York Times rent-vs-buy calculator, popularized in the mid-2000s, introduced the concept of a crossover year — the point at which cumulative buying costs (net of equity) fall below cumulative renting costs. This calculator uses the same fundamental logic: it computes the net cost of each path year by year, accounting for equity buildup on the buying side and investment returns on the renting side. The crossover year appears in the schedule table where the buy advantage column flips from negative to positive.

›What is the opportunity cost of the down payment and why does it matter?

When you put money into a down payment, you give up whatever that money would have earned elsewhere. At a 7% average annual return — a rough long-run stock market historical average — $90,000 grows to about $177,000 over ten years. That $87,000 in foregone growth is a real economic cost of homeownership. The only way buying compensates for it is through home appreciation plus equity buildup from mortgage paydown. This calculator models that trade-off explicitly.

›Why do short horizons almost always favor renting?

Buying a home costs roughly 3% upfront in closing costs and 6% on exit in selling costs. That is roughly 9% of the home's value consumed by transaction friction before appreciation or equity has had time to accumulate. Over two years, even 4% annual appreciation only grows the home's value by about 8%, which barely covers selling costs alone. Mortgage payments in the early years are also heavily weighted toward interest, not equity. Renting sidesteps all of this.

›How is home equity at exit calculated?

Equity at exit equals the appreciated home value minus the remaining mortgage balance minus the cost of selling (defaulted to 6% of the sale price). The appreciated value uses the compound formula: home price × (1 + appreciation rate)^years. The remaining mortgage balance is the standard amortization formula. Both are shown in the schedule.

›Does this calculator include the mortgage interest tax deduction?

No. The tax benefit of deducting mortgage interest depends on your marginal tax rate, whether you itemize deductions, the amount of interest you pay, and the current standard deduction amount — which in 2024 makes itemizing worthwhile for only about 10–12% of filers. Because this benefit is highly variable and often overstated, it is omitted here. If you itemize, the deduction makes buying somewhat more attractive than this model shows.

›What is PMI and when does it apply?

Private mortgage insurance (PMI) is required by most conventional lenders when your down payment is below 20% of the purchase price. It protects the lender, not you. This calculator models PMI at 0.5% of the original loan balance annually, applied monthly until your remaining balance falls to 80% of the original purchase price. On a $450,000 home with 10% down, that is roughly $169/month until you reach 80% LTV.

›How should I choose the investment return rate assumption?

The investment return rate represents what your down payment would earn if invested in a diversified portfolio instead. The S&P 500 has returned roughly 7% annually in real terms over the long run, though any given decade can vary widely. If you would hold the money conservatively in bonds or a savings account, use a lower rate (3–4%). If you are a long-horizon equity investor, 6–8% is reasonable. Higher return assumptions favor renting; lower ones favor buying.

›Why does the 1% maintenance rule exist, and is it realistic?

The 1% rule — budget 1% of home value per year for maintenance — is a widely used rule of thumb because it is simple and roughly consistent with long-run empirical data on homeownership costs. Newer homes may need less; older or larger homes often need more. On a $450,000 home, that is $4,500 per year, or $375 per month. Many buyers ignore this cost entirely, then feel 'house poor' when the roof needs replacing or the HVAC fails.

Related calculators and guides

Last reviewed and sources

Last reviewed .