U.S. rent versus buy calculator
Both paths priced in full: the down payment, every carrying cost, the sale at the end net of what it costs to get out, and the return you gave up on the cash.
Worked example — Over 5 years, in today's dollars, cheaper to rent: $7,924. $450,000 home, 20% down, 6.5% mortgage, $2,550 rent, discounted at 5%
The home you might buy
The renting alternative
Advanced options 12
Payment $2,275 against rent $2,550: the usual comparison says buy, by $275 a month. It leaves out the down payment, the carrying costs, and the cost to sell. The full present-value comparison says rent.
Reload to use your numbers. The verified worked example is still available:
- Home price
- $450,000
- Rent
- $2,550/mo
- Time in the home
- 5 years
- Lower-cost path
- cheaper to rent: $7,924
How many years does it take for buying to break even versus renting?
On the default scenario, a $450,000 home with 20% down at 6.5% against $2,550 rent, buying pulls ahead of renting in present value at year 6.0 of ownership. That is solved by evaluating the full discounted-cashflow model at every holding period from one year to 40 and finding where the advantage changes sign, not guessed from a rule of thumb.
The payment-vs-rent shortcut, and why it disagrees with the real answer
Almost every other calculator stops at the mortgage payment against the rent. That comparison leaves out the down payment sitting in the house earning nothing, the carrying costs, and the cost to sell.
| Comparison | Says | By |
|---|---|---|
| Payment vs rent (the shortcut) | Buy | $275/mo |
| Full present-value comparison | Rent | $7,924 |
The shortcut leaves out $101,250 put in at the start, $61,534 of tax, insurance, and maintenance over 5 years, and $40,084 to sell at the end.
What each path actually costs, item by item
Every dollar on both paths over 5 years, nominal, then discounted at 5%.
| Item | Buy | Rent |
|---|---|---|
| Down payment and closing costs | $101,250 | $0 |
| Mortgage interest | $113,526 | $0 |
| Principal repaid, which is saving rather than cost | $23,000 | $0 |
| Property tax, insurance, maintenance, HOA | $61,534 | $0 |
| Rent and renters insurance | $0 | $165,238 |
| Sale at year 5, net of cost to sell and the balance | -$157,375 | $0 |
| Present value at 5% | $153,360 | $145,435 |
What we think
Rent versus buy is almost entirely a question about how long you stay, and hardly at all about the payment. Transaction costs on the exit are what make short ownership expensive, and they are close to fixed in percentage terms, so a shorter stay has fewer years to spread them across. Under five years, renting wins on most reasonable inputs. Over ten, buying usually wins even at modest appreciation. Between those, the answer is genuinely close and worth deciding on something other than money. If your honest answer to how long you will be here is not sure, treat that as a number under five and rent.
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