Published: 27 October 2026 · Updated: 27 October 2026
With the defaults — a $450,000 home, 20% down, 6.5% mortgage versus $2,200/month rent — buying costs more for the first four years, then breaks even in year 5 and wins by $72,942 over 10 years. Enter your own numbers below to find your breakeven year.
Renting wins short stays; buying wins long stays — and the crossover is usually a few years, not decades. The deciding factors are your monthly payment gap, how fast rents rise, and the equity you build — the calculator below weighs all three instead of comparing one month's rent to one month's mortgage.
Researched by MixKhazana Team · Last updated 27 October 2026 · Data: Standard amortization formula; inputs are user-entered (no market-rate claims) — worked example uses the page defaults
A rent vs buy calculator compares the full cost of owning a home with the full cost of renting one over the same number of years, and finds the breakeven year — the point where buying becomes cheaper than renting. Comparing one month's rent with one month's mortgage payment is misleading: buying piles up closing-era costs early (down payment, fees) but builds equity every month, while renting looks cheap at first and then rises with rent growth every year. This tool totals both paths year by year, credits the buyer with equity at a hypothetical sale, and reports the crossover. For the mortgage math behind it, see our mortgage payment calculator and mortgage affordability calculator.
Answer-block fact: on the page defaults, the buyer pays $2,275.44 a month in mortgage payments alone on a $360,000 loan at 6.5% over 30 years (standard amortization formula), plus $412.50 a month in property tax and $180 in insurance — yet still breaks even against $2,200 rent in year 5, because rent grows at 3% a year while the mortgage payment never moves. Fixed payments versus rising rents is the engine of the whole comparison.
The monthly mortgage payment uses the standard amortization formula: M = P × r ÷ (1 − (1 + r)−n), where P is the loan amount ($360,000 on the defaults), r is the monthly rate (6.5% ÷ 12 = 0.5417%) and n is the number of payments (360 for 30 years). That gives $2,275.44 a month, fixed for the life of the loan. Each year, the buying path adds mortgage payments, property tax (1.1% of the appreciated value), insurance and maintenance (1% of value), then subtracts the equity you would hold at a sale: the appreciated home value minus the remaining loan balance minus 6% selling costs. The renting path simply adds up rent, growing at 3% a year. The breakeven year is the first year in which the buying total falls below the renting total.
Three inputs swing the answer most. How long you stay: under 3–4 years, renting almost always wins because the down payment and selling costs never get repaid. Rent growth: at 3% a year, $2,200 rent becomes about $2,947 a month by year 10 — the mortgage never moves. Appreciation: at 3% a year the $450,000 home is worth about $604,000 by year 10, which is where most of the buyer's advantage sits. Change any of them and watch the breakeven year move.
A buyer and a renter start equal in year 1 with the page defaults ($450,000 home, 20% down, 6.5%, 30 years; rent $2,200 growing 3% a year; appreciation 3% a year):
The table below shows how the two paths evolve on the defaults. Notice the pattern: renting wins early because the buyer carries the down payment, then the lines cross in year 5 as rents compound upward and equity compounds for the buyer. If your stay is shorter than the breakeven year, renting is the cheaper choice at these inputs — that is the single most useful output of the tool. For the savings side of the same decision, our savings goal calculator and emergency fund calculator help size the down payment and the safety buffer first.
| Year | Total cost of buying | Total cost of renting | Cheaper |
|---|---|---|---|
| 1 | $49,202 | $26,400 | Renting |
| 3 | $92,484 | $81,600 | Renting |
| 5 | $134,125 | $140,161 | Buying ✓ |
| 10 | $229,704 | $302,646 | Buying ✓ |
The breakeven year is the first year in which the total cost of buying falls below the total cost of renting, counting everything: down payment, mortgage payments, taxes, insurance, maintenance and selling costs, minus the equity you hold at a sale. Before that year renting is cheaper; after it buying is cheaper. On the page defaults the breakeven year is 5.
Because buying front-loads costs. The down payment ($90,000 on the defaults) counts in year 1, selling costs of 6% apply whenever you sell, and early mortgage payments are mostly interest, so equity builds slowly at first. Renting has no such lump sums, so it wins until rising rents and growing equity tilt the balance — usually within 3 to 7 years at typical inputs.
No. The model assumes at least 20% down, which normally avoids private mortgage insurance. If your down payment is under 20%, add an estimated PMI amount to your monthly insurance input to approximate it — PMI commonly runs 0.3% to 1.5% of the loan per year, and it disappears once you reach 20% equity. Your lender's quote is the exact figure.
The model does not credit the renter with investment returns on money not spent on a down payment, which slightly favours buying. If you would invest the $90,000 down payment instead, that portfolio growth is a real renting advantage — roughly, at 5% a year it would be worth about $147,000 after 10 years. Treat the breakeven year as optimistic for buying by a year or so if you are a disciplined investor.
In the United States, mortgage interest and property tax may be deductible if you itemize, subject to current caps (including the $10,000 state-and-local-tax limit), which would make buying look better than this model shows. The model excludes deductions because many buyers now take the standard deduction instead. If you itemize, your true buying cost is lower than shown.
Very. Appreciation drives the equity credit at sale, which is the buyer's biggest advantage. At 0% appreciation the same defaults break even much later, and in a falling market buying may never win within 10 years. That is why the tool lets you set appreciation yourself — use a conservative figure (0–3%) rather than a boom-year number, and re-run it at 0% to see your downside case.
Yes, if the home has them. Add your monthly HOA fee to the insurance input, or add its yearly total to the maintenance percentage, so the comparison reflects the true monthly cost of owning. A $300 monthly HOA fee adds $3,600 a year to buying and can push the breakeven year out by a full year or more.
Yes, in high-price, low-rent markets where the price-to-rent ratio is extreme, or when rent growth is very low. If a $450,000 home rents for only $1,500 a month and rents barely grow, the buyer's fixed costs never catch the renter's advantage. Run your city's actual numbers — the breakeven year, not a rule of thumb, is the answer.