This calculator compares renting and buying on net worth rather than monthly payments, which is the only comparison that actually answers the question. It models the buying side — mortgage, taxes, insurance, maintenance, PMI, appreciation and the selling costs you pay to get your equity out — against a renter who invests the down payment, the closing costs and every month's savings at your chosen return. The output is the breakeven year: the point at which buying pulls ahead. Adjust the investment return to see how sensitive the answer is, since it moves the result more than any other input. See the mortgage calculator for the payment breakdown or the refinance calculator if you already own.
Rent vs Buy Calculator
Three paths side by side — buy, rent and invest, or rent and spend — with the return that would flip the answer.
PMI of 0.5% a year is added automatically while you owe more than 80% of the purchase price. Under IRC section 121 a primary residence is exempt from capital gains tax on the first $250,000 of profit if you file single, $500,000 if married filing jointly. Anything above that is taxed at the rate on the other tab.
The deposit comes back when you move out, so it never counts as money spent — but while it is with the landlord it earns nothing, and that is counted.
Verdict after 10 years
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Money — what you are worth at the end
Time — when each line crosses
What would have to change
If you invest instead of buying
Where the money actually goes
Net worth, year by year
Buy
Rent + invest
Rent only
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Why monthly payment comparisons mislead
The usual way people frame this question — "my mortgage would be about the same as my rent" — leaves out almost everything that decides the answer. It ignores the tens of thousands in upfront cash, the maintenance and taxes a landlord currently absorbs, the transaction costs on both ends, and most importantly what that down payment would have earned somewhere else. This calculator compares the two paths on net worth instead, which is the only comparison that settles it.
How the model works
On the buying side it tracks your home's value as it appreciates, subtracts the remaining mortgage balance, and subtracts the selling costs you would pay to actually realise that equity. Every ownership cost — mortgage interest, property tax, insurance, maintenance, HOA and PMI — is money spent, not saved.
On the renting side it assumes a disciplined renter: the down payment and closing costs go into investments on day one, and any month where renting is cheaper than owning, the difference is invested too. That portfolio compounds at your chosen return. The breakeven year is the first year the buyer's net worth overtakes the renter's and stays ahead.
Opportunity cost is the hidden variable
This is what most calculators bury. An £80,000 down payment invested at 7% becomes roughly £157,000 in ten years. That forgone growth is a genuine cost of buying, and it is usually larger than any single line item on the ownership side. It is also why the investment return input moves the answer more than anything else: at 4% buying often wins within a decade, while at 8% renting and investing can stay ahead for the entire term.
The round-trip transaction cost
Buying and selling a house costs roughly 8–11% of the value in total — 2–5% in closing costs going in and 5–6% in agent fees and transfer taxes coming out. That is the hole you start in, and it is why the conventional wisdom says five to seven years minimum. If you might move within three years, the maths rarely favours buying regardless of what happens to prices.
The price-to-rent ratio shortcut
Divide the home price by the annual rent for a comparable property. Under 15 generally favours buying, over 20 generally favours renting, and 15–20 is genuinely ambiguous and depends on the rest of your inputs. It is a useful sanity check on whatever the full model tells you.
What this model does not include
It does not model mortgage interest tax deductions, which since the 2017 standard deduction increase apply to a minority of US homeowners anyway, nor the capital gains exclusion on a primary residence, nor stamp duty and equivalent purchase taxes outside the US. It also assumes the renter actually invests the difference — the single most common reason real-world outcomes favour buying is that most people spend it instead. Buying forces saving in a way that renting does not, and that behavioural effect is real even though it does not appear in any formula.
Finally, the non-financial side genuinely matters and no calculator can weigh it for you: security of tenure, freedom to renovate, and not being asked to leave, against mobility, no maintenance calls, and not having your net worth concentrated in one illiquid asset in one town. Run the numbers, then decide how much those are worth. Our mortgage calculator breaks down the payment itself in more detail.
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Frequently asked questions
How many years do I need to stay for buying to make sense?
Typically five to seven, because the round-trip transaction cost is roughly 8–11% of the home's value and it takes years of principal paydown and appreciation to recover. In expensive markets with high price-to-rent ratios it can exceed ten years. Under three years, renting almost always wins.
Is renting really throwing money away?
No — and the framing hides that buying has non-recoverable costs too. Mortgage interest, property tax, insurance, maintenance and transaction fees all leave permanently, and in the early years of a mortgage the interest alone often exceeds the equivalent rent. Only the principal portion builds equity.
Why does the investment return change the answer so much?
Because the down payment is a large sum compounding for the whole period. At 4% buying often breaks even within a decade; at 7–8% — near long-run stock market averages — a disciplined renter who invests the difference can stay ahead for thirty years. It is the most important input in the model.
What is the price-to-rent ratio and how do I use it?
Home price divided by annual rent for a comparable property. Below 15 favours buying, above 20 favours renting, and 15–20 depends on your other assumptions. It is a fast first check before running a full comparison.
Does this account for tax?
Partly. Capital gains tax is modelled on both sides: the renter's investment gains are taxed when the portfolio is sold, and home profit is taxed only above the section 121 exclusion of $250,000 single or $500,000 married filing jointly. Income tax is not modelled. Since the 2017 standard deduction increase most US homeowners no longer itemise, so applying the mortgage interest deduction by default would flatter buying for the majority. If you do itemise on a large mortgage, buying looks somewhat better than shown here.
Should I put down more than 20%?
It cuts your monthly payment and avoids PMI, but it also removes more capital from the market. If your mortgage rate is below your expected investment return, a larger down payment costs you money in expectation. Above 20% the PMI argument disappears and it becomes a straight rate-versus-return comparison.
What return would change the answer?
The calculator solves for it directly. It reports the investment return below which buying wins, and the rate of home appreciation above which buying wins, holding everything else fixed. Those two assumptions move the result more than the purchase price or the rent does, so seeing how much room you have before the verdict flips matters more than the verdict itself.