Rent vs. Buy Calculator
Find the breakeven year — the point where buying a home becomes cheaper than renting — for any US state, using live median home prices, property taxes, and average insurance. Adjust any assumption to match your situation.
Your situation
Rent vs. buy
Renting wins over 10 yr
Over 10 years, renting stays cheaper than buying in California under these assumptions.
- Monthly P&I
- $3,868/mo
- Upfront (down + closing)
- $175,950
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In California, renting stays cheaper than buying a $765,000 home over 10 years at 6.5% — The Mortgage Ledger.
Assumptions: 3% closing costs, 1%/yr maintenance, 6% selling costs, 2.5% inflation, $1,600/yr home insurance (survey average), and the renter invests the upfront cash a buyer would have spent (at your invest return). Estimates only — not financial advice.
Renting isn't 'throwing money away,' and buying isn't automatically the smart move — it comes down to how long you stay. This calculator finds your breakeven year: the point where the total cost of buying a home, counting the equity you build, finally drops below the cost of renting and investing your down payment instead.
How this calculator works
On the buy side it adds up everything you actually spend — the upfront down payment and closing costs, then each year's mortgage principal and interest, property tax, home insurance, maintenance, and PMI if you put down less than 20%. Against that it credits the equity you'd walk away with if you sold: the home's appreciated value minus your remaining loan and selling costs.
On the rent side it totals your rent (rising a little each year) plus renter's insurance — and, crucially, it assumes the cash a buyer sinks into a down payment and closing is instead invested and earning a return. That opportunity cost is what makes renting genuinely competitive, not just the monthly rent figure.
A breakeven year exists because the two sides move at different speeds. Buying is expensive up front — the down payment, closing costs, and early payments that are almost all interest — so renting wins the early years. But rent keeps climbing while your mortgage builds principal and the home appreciates, so the buy line eventually crosses below the rent line. Stay past that year and buying wins; move before it and renting was the cheaper choice.
A worked example
Take California's median-priced home at an example 6.5% rate with 20% down, rent estimated from the local price-to-rent ratio, over a 30-year horizon:
- Home price (California median)
- $765,000
- Estimated rent (≈ price ÷ 240)
- $3,188/mo
- Upfront to buy (20% down + 3% closing)
- $175,950
- Monthly mortgage — P&I @ 6.5% example
- $3,868/mo
- Breakeven — when buying pulls ahead
- Year 13
Live inputs: California's median home price, its effective property-tax rate, and the state-average home-insurance premium; rent is estimated at price ÷ 240 and both sides grow over time. The breakeven is the first year buying's cumulative net cost — after the equity you'd keep on resale — falls below renting's, once the upfront cash is invested instead. Lower the rate, raise appreciation, or increase rent in the calculator and it moves earlier.
Who it's for
- You're deciding whether to keep renting or buy, and want to know how long you'd need to stay for buying to pay off.
- You've been told renting is 'wasting money' and want to see the real math — opportunity cost included.
- You're weighing a bigger down payment, a different state, or a shorter time horizon against renting.
Frequently asked questions
Is it better to rent or buy?
It depends almost entirely on how long you'll stay. Buying carries heavy upfront costs — a down payment, closing costs, and early payments that are mostly interest — so in the first few years, renting and investing the difference usually wins. The longer you stay, the more your mortgage builds equity and the more rising rent costs you, until buying pulls ahead. This calculator pinpoints that crossover year for your numbers.
What is the breakeven point in rent vs. buy?
It's the first year the total cost of buying — every dollar spent, minus the equity you'd keep after selling — drops below the total cost of renting, including the investment return you'd have earned on your down payment. Before that year renting was cheaper; after it, buying is. For a median-priced home in a high-cost market it often lands somewhere in the 8–15 year range, but a lower rate, faster appreciation, or higher rent all pull it earlier.
Does this include my down payment's investment potential?
Yes — and that's the piece most simple comparisons miss. The model assumes the cash a buyer spends on the down payment and closing costs is instead invested at a return you choose (5% by default), and credits those gains to the renting side. Without that opportunity cost, buying looks far better than it really is; including it is what makes the breakeven honest.
What costs does the buy side include?
The down payment and closing costs up front, then each year's mortgage principal and interest, property tax at your state's effective rate, home insurance at the state-average premium, maintenance (1% of the home's value a year), and PMI if you put down under 20%. It then subtracts the equity you'd keep after selling — the appreciated home value minus your remaining loan and selling costs.
Why does a bigger down payment change the answer?
In two opposite directions. A larger down payment shrinks your loan and can remove PMI, which lowers the cost of buying — but it also ties up more cash that could have been invested if you rented, which raises renting's opportunity-cost advantage. The calculator captures both effects at once so you can see the net result rather than guessing.
Is renting really throwing money away?
Not necessarily. Rent buys you housing and flexibility with no maintenance, transaction costs, or market risk — and the down payment you didn't spend can be invested. Buying only comes out ahead once you've stayed long enough for equity and rising rents to overcome those upfront costs. Whether renting 'wastes' money depends entirely on how your timeline compares to the breakeven year.
Educational estimate, not financial advice. The model credits the renter with investing the upfront cash a buyer would spend (down payment + closing) at your chosen investment return, and accounts for appreciation, resale/selling costs, property tax, insurance, maintenance, and PMI — the standard rent-vs-buy framing. Currently US-only: median home prices are available for US states; a Canada/UK version follows once comparable price data is in place.