Is it cheaper to rent or buy?
The answer depends mostly on how long you will stay. Buying has large one-time costs at the start (down payment and closing costs) and at the end (about 6% to sell). Over a short stay those costs often outweigh the equity you build. Over a longer stay, rising home value and a paid-down loan usually tip the balance toward buying.
What the calculator compares
- Buying: down payment, closing costs, mortgage payments, property tax, insurance and upkeep, minus the equity you walk away with after selling.
- Renting: rent that rises each year, minus what your down payment and closing costs could have earned if invested instead.
It assumes 20% down, 3% yearly growth in home prices and rent, 1% yearly maintenance, 6% selling costs and a 5% return on invested cash. Real results depend on your local market.
Frequently asked questions
How many years do I need to stay for buying to make sense?
It varies by market, but buying often starts to win after about five to seven years. Enter the number of years you expect to stay to see your own break-even.
Is rent money wasted?
No. Rent buys housing, flexibility and freedom from repair bills. Owners also pay costs they never get back, such as interest, property tax, insurance and maintenance.
What if home prices fall?
If prices drop, buying looks worse, especially over a short stay. The longer you plan to stay, the more time a home has to recover from a downturn.