# Rent vs Buy Calculator > Compare the total cost of renting vs buying a home over a time horizon. Accounts for mortgage, taxes, insurance, maintenance, appreciation, and opportunity cost of the down payment. URL: https://uttir.com/rent-vs-buy-calculator Categories: calculators, math-tools Privacy: All math runs locally. No financial data leaves your browser. ## About Rent vs buy is one of the largest financial decisions most people make. The "obvious" answer (buy, because you build equity) ignores the opportunity cost of the down payment, ongoing ownership costs, and the time value of flexibility. The "obvious" alternative (rent, because it is cheaper in the short term) ignores the fact that rent goes up every year while a fixed-rate mortgage does not. This tool computes the total cost of each path over a 5-15 year time horizon, accounting for: monthly rent (and annual rent increase), mortgage payments, property tax and insurance, maintenance, home appreciation, and the opportunity cost of the down payment (what it could earn in a stock index fund if you were renting instead). The result tells you which path is cheaper over the horizon you choose. ## How to use 1. **Enter your rent scenario** — Current monthly rent and the annual rent increase (typical: 3-5% in stable markets, 5-10% in hot markets). 2. **Enter the buy scenario** — Home price, down payment %, mortgage rate, mortgage term, property tax + insurance, and maintenance. Most of these are public records (county assessor) for a property you are considering. 3. **Set the appreciation and investment return** — Home appreciation: 0-5% realistic for most US markets. Investment return on the down payment: 7-10% long-run historical for a global stock index fund. 4. **Pick a time horizon** — 5-7 years is the typical minimum to break even on buying (closing costs eat the first few years of equity). 10-15 years is more realistic for buying to clearly beat renting. ## Examples ### $500k home, $2.5k rent, 7-year horizon A typical comparison in a mid-cost US city. Output: ``` Outcome depends heavily on appreciation and rent inflation. With 3% home appreciation and 3% rent inflation, buying wins by ~$30k. With 5% appreciation and 5% rent inflation, buying wins by ~$80k. ``` ## FAQ ### Is renting always cheaper? No. The outcome depends on: (1) how long you stay, (2) the home price-to-rent ratio in your area, (3) the rent inflation rate vs home appreciation rate, and (4) the opportunity cost of the down payment. In expensive coastal US markets (SF, NYC, Boston), the math often favors renting because home prices are 30-50× annual rent. In the Midwest US, the math often favors buying because home prices are 15-20× annual rent. The tool gives you the specific answer for your situation. ### What is the "5-year rule" for buying? A common rule of thumb: only buy if you expect to stay at least 5-7 years. Closing costs (typically 3-6% of the home price) and the early years of a mortgage (where most of the payment is interest, not principal) mean the first 5 years are mostly recouping costs. If you sell before 5 years, you are likely to lose money. The tool can show you the breakeven year for your specific scenario. ### What about the tax benefits of homeownership? In the US, mortgage interest and property tax are deductible on your federal taxes (within limits: mortgage interest on up to $750k of mortgage debt, SALT deduction capped at $10k). The value depends on your marginal tax rate and whether you itemize. This tool does not model the tax benefit — for a precise answer, use a tax calculator or talk to a CPA. Most homeowners with a mortgage in a high-tax state benefit by $1,500-$3,000/year from the mortgage interest deduction alone. ### What if I am not sure about appreciation? Run the tool with 0% appreciation (i.e. the home does not appreciate in real terms, ignoring inflation). This is the conservative "house as a place to live, not an investment" scenario. If buying still wins, it is a robust decision. If buying only wins at 5% appreciation, the decision depends on your belief in the local market. ## Related tools - [Mortgage Calculator](https://uttir.com/mortgage-calculator) — Estimate monthly mortgage payments, including down payment, property tax, and insurance. - [Rental Yield Calculator](https://uttir.com/rental-yield-calculator) — Calculate gross yield, net yield (cap rate), and cash-on-cash return for a rental property. Includes monthly cash flow and time to recoup. - [Loan Calculator](https://uttir.com/loan-calculator) — Calculate monthly payments, total interest, and a full amortization schedule for any loan. - [Compound Interest Calculator](https://uttir.com/compound-interest-calculator) — Project savings growth with compound interest and monthly contributions, year by year. - [Inflation Calculator](https://uttir.com/inflation-calculator) — Calculate how inflation erodes purchasing power over time. Custom rate or historical U.S. CPI averages from 1990 onward. --- For the full HTML page with the live tool, visit https://uttir.com/rent-vs-buy-calculator. This file is the markdown rendering at https://uttir.com/rent-vs-buy-calculator.md. See https://uttir.com/llms.txt for a site-wide summary.