About this calculator
Renting versus buying is usually decided by one number: how long you will stay. Buying loads its costs up front — a down payment, closing costs, and later selling costs — while renting spreads its costs evenly and keeps your cash invested. That is why renting almost always wins for a one- or two-year stay, and why buying usually wins if you stay for decades: the fixed costs get spread thinner every year, and each mortgage payment buys a little more of the house.
This calculator compares the two paths as net costs. For buying, net cost is everything you pay (upfront cash plus all owning costs) minus the equity you would recover by selling. For renting, net cost is all rent paid minus what the upfront cash would have grown to if invested instead. The first year buying's net cost drops below renting's is the breakeven year. One honest limitation: the renter is not credited with investing the monthly saving in years when rent is cheaper than owning, so the breakeven leans slightly toward buying — treat it as a planning range and re-run it with pessimistic appreciation before deciding.
Use the country menu at the top to load starting assumptions for the United States, China, Taiwan, the United Kingdom, Canada or Australia — or pick Other (custom) and fill in your own. These presets are editable starting points, not market statistics: every figure, from the mortgage rate to the property tax rate, can and should be adjusted to your own situation before you trust the result.
How to use it
- Enter the home price, down payment, mortgage rate and term for the house you would buy.
- Add the owning costs: property tax, insurance, HOA and maintenance as a share of the home's value each year.
- Enter the rent for a comparable home, plus your assumptions for rent growth, home appreciation and investment return.
- Set how long you plan to stay, then read the breakeven year first and the table second: if your stay is shorter than the breakeven year, renting wins on the numbers.
The formula
The mortgage payment uses the standard amortization formula: P is the loan amount, r the monthly rate and n the number of payments. Property tax and maintenance are charged on the home's value at the start of each year, so they rise with appreciation; rent rises at the start of each year too. Equity at year N is what a sale would leave after selling costs and paying off the remaining loan — that is the money buying gives back, which is why buying can win even though it costs more month to month.
Worked example
A $400,000 home with 20% down ($80,000) plus 3% closing costs ($12,000) needs $92,000 upfront. At 6.5% over 30 years the mortgage payment is $2,022.62 a month; with 1.1% property tax, $1,800 insurance and 1% maintenance, owning costs $2,872.62 a month in year 1 against $2,400 rent for a comparable home. With rent growing 3% a year, the home appreciating 3% a year and the upfront cash earning 5% invested, buying breaks even in year 6 — after 5 years renting is still ahead by $3,137, but at a planned 7-year stay buying is ahead by $17,462. Change appreciation to 0% and the breakeven pushes years later, which is exactly why you should test a low-growth case before deciding.
Frequently asked questions
Why does buying only win after several years?
Because buying pays its costs twice over at the ends: closing costs when you buy and selling costs (typically around 6%) when you sell, plus the down payment is tied up from day one. Those fixed costs weigh heavily on a short stay and fade with time, while equity builds slowly at first — early mortgage payments are mostly interest — and faster later. That shape is why the breakeven year, not the monthly payment, is the number that matters.
What moves the breakeven year most?
In order: how long you stay, the price-to-rent ratio (a home that costs far more per month to own than to rent needs strong appreciation to win), home appreciation, and the mortgage rate. A 1-point rate rise or a switch from 3% to 0% appreciation can each push breakeven out by several years. Investment return matters too: the higher the return on the cash you would otherwise invest, the longer buying takes to win.
Does this calculator include the mortgage interest tax deduction?
No, and that omission is deliberate for a first estimate: since the standard deduction rose, most homeowners no longer itemize, so most get no extra benefit from deducting mortgage interest. If you do itemize, buying is somewhat better than shown here — the effect is largest in the early years, when interest is the biggest share of the payment. State taxes and capital-gains tax on a sale are also left out.
Should I buy if the numbers say buying wins?
Not on the numbers alone. Flexibility has value: a job move, a relationship change or a market fall can force a sale before breakeven, and selling early is where buyers lose the most money. Maintenance risk also sits with the owner — a new roof or foundation problem is a five-figure surprise renters never face. Use the breakeven year as a filter (if you might move before it, rent), then weigh job stability, savings cushion and how much you value owning before deciding.
Why is UK council tax and Australian council rates entered as a percentage of the home price?
In reality both are fixed annual bills set by the local council, not a percentage of the property value. This calculator has a single property-tax field, so the UK and Australia presets express that bill as an annual-cost approximation: your yearly council bill divided by the home price. If you know your actual bill, replace the preset percentage with bill ÷ price — for a £300,000 home with a £2,100 council tax bill, that is 0.7%.
Why is the China preset property tax 0%?
Because residential property in most Chinese cities currently carries no annual property tax — the pilot programs in Shanghai and Chongqing cover only some homes. The preset is 0% for the common case; if your home is in a pilot area or a tax applies, enter the actual annual amount as a percentage of the price.
Why is the Taiwan preset property tax only 0.3%?
Because Taiwan's house tax (房屋稅) is levied on the government-assessed current value (房屋評定現值), not the market price — and the assessed value is typically far below what the home would sell for. So as a share of market price the effective rate looks low: 0.3% of a NT$12,000,000 market price is NT$36,000 a year. If you know your actual tax bill, replace the preset with bill ÷ market price.
What formula does this rent vs buy calculator use?
Monthly P&I = P·r ÷ (1 − (1+r)^−n); Net cost of buying (year N) = upfront + owning costs to N − (value at N × (1 − selling %) − loan balance at N); Net cost of renting (year N) = rent paid to N − growth on the upfront cash invested instead The mortgage payment uses the standard amortization formula: P is the loan amount, r the monthly rate and n the number of payments. Property tax and maintenance are charged on the home's value at the start of each year, so they rise with appreciation; rent rises at the start of each year too. Equity at year N is what a sale would leave after selling costs and paying off the remaining loan — that is the money buying gives back, which is why buying can win even though it costs more month to month. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.