Rent vs Buy Calculator

What the break-even year really tells you

Renting and buying both cost money — the question is which one costs less over the time you'll actually stay. Buying front-loads big costs (the down payment, closing costs) and only pays off later, as you build equity and the home appreciates. Renting is cheaper up front but never builds a dime of equity. The break-even year is where those two paths cross: the first year the cumulative net cost of owning finally drops below the cumulative cost of renting. Stay past your break-even year and buying wins; move before it and renting was the smarter call.

This calculator finds it by running both paths year by year. Owning is tracked as the down payment plus buying closing costs, plus every mortgage payment, property tax bill, maintenance dollar, HOA due, and the down payment's opportunity cost — minus the equity you'd recover if you sold that year (the appreciated home value, less your remaining loan balance and the cost to sell). Renting is simply your rent, grown each year at the rate you set. The chart above draws both curves and marks the year they cross.

The cost most calculators forget: your down payment's opportunity cost

Here's the number most rent-vs-buy tools quietly ignore. When you sink $80,000 into a down payment, that money stops working for you in the market. If it could have earned 7% a year invested instead, you're giving up thousands of dollars of growth every single year it's locked in home equity. That foregone return is a real cost of buying — and leaving it out makes owning look cheaper than it truly is. We add it back in with the investment-return input, so the comparison is honest. Turn that input up and watch the break-even year slide further out; that's the opportunity cost doing its work.

How the numbers are calculated

Each mortgage payment uses the standard amortized formula M = P · r · (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan (home price minus down payment), r is the monthly rate, and n is the number of months in the term. Each year we add up the interest and principal actually paid, the property tax and maintenance (both a percentage of the current home value), HOA, and an insurance approximation. The home value grows at your appreciation rate; the loan balance falls on its amortization schedule. Net owning cost in any year assumes you sell that year: total cash out plus opportunity cost, minus the sale proceeds (appreciated value − remaining balance − selling costs).

Related articles

• Rent vs. buy: the 5% rule and where it breaks — the fast shortcut, and the four places it misleads you.
• How long do you have to stay to justify buying? — why your time horizon decides it.
• The opportunity-cost math most calculators ignore — the biggest cost of owning that tools leave out.

Related calculators

• Home Affordability Calculator — how much house your income actually supports.
• Refinance Calculator — find your refinance break-even month.
• Compound Interest Calculator — see how invested money grows over time.
• All calculators — browse the full Reckora directory.

Not financial advice. Results are estimates for educational purposes only. Real-world outcomes depend on your local market, rates, taxes, insurance, and how long you stay, and are not guaranteed. Home values can fall as well as rise. Confirm the numbers with a lender, a tax professional, and a real estate agent before making a decision.