Decision guide
Should I Rent or Buy?
The handful of questions that actually decide it — and a calculator to put numbers behind your answer.
The short version
Buy if you'll stay long enough (usually 5–7+ years) for equity and appreciation to beat the big transaction costs, and if rent is high relative to home prices where you live. Rent if you might move soon, rent is cheap, or you'd rather invest the down payment. Run your own numbers below.
Signs buying makes sense
- ✓You'll stay put for at least 5–7 years.
- ✓Rent for a comparable home is close to (or above) a mortgage payment.
- ✓You have a stable income and an emergency fund beyond the down payment.
- ✓You want to lock in housing costs against rising rents.
Signs renting makes sense
- ✓You might move within a few years (job, family, or lifestyle).
- ✓Rent is cheap relative to home prices in your area.
- ✓You'd invest the down payment and expect a strong return.
- ✓You value flexibility and not owning the maintenance risk.
Put numbers behind it
Rules of thumb only go so far — the honest answer depends on your price, rent, and how long you'll stay. This is the same calculator from the main tool: it compares the wealth you'd build each way and finds your break-even year.
After 7 years,
Renting wins
by $29,222 in net worth
- Net worth if you buy
- $174,410
- Net worth if you rent
- $203,632
- Mortgage payment (P&I)
- $2,022.62/mo
- Break-even on buying
- Not within horizon
Buying never overtakes renting within 7 years here — renting and investing the difference builds more wealth.
| Year | Net worth (buy) | Net worth (rent) | Better |
|---|---|---|---|
| 1 | $71,013 | $107,049 | Rent |
| 2 | $86,614 | $122,395 | Rent |
| 3 | $102,828 | $138,042 | Rent |
| 4 | $119,685 | $153,988 | Rent |
| 5 | $137,213 | $170,235 | Rent |
| 6 | $155,444 | $186,784 | Rent |
| 7 | $174,410 | $203,632 | Rent |
Frequently asked questions
Is it better to rent or buy a house?+
It depends mostly on how long you'll stay. Buying has big upfront and selling costs, so you need enough time for home equity and appreciation to outweigh them — often 5 to 7 years. Renting is usually cheaper for short stays and keeps your down payment invested. This calculator compares your actual numbers and shows which builds more wealth over your time horizon.
How does the rent vs buy calculator decide?+
It uses the fair net-worth method: the renter and the buyer start with the same cash (your down payment plus closing costs), and each month both spend the same total — the buyer on the mortgage, taxes, insurance, and upkeep; the renter on rent. Whoever's housing costs less invests the difference. At the end of your time horizon it compares each side's net worth: the buyer's home equity after a sale plus investments, versus the renter's portfolio.
What is the break-even point for buying?+
The break-even point is the year your net worth as a buyer catches up to and passes your net worth as a renter. Before break-even, renting and investing the difference leaves you richer; after it, owning does. The calculator reports the break-even year for your inputs — if it's later than you plan to stay, renting is the financially stronger choice.
What costs does buying include besides the mortgage?+
A lot. Beyond principal and interest, owning includes property tax, homeowner's insurance, maintenance (budget about 1% of the home's value a year), any HOA dues, closing costs when you buy (2%–5%), and selling costs when you leave (around 6%, mostly the agent commission). The calculator includes all of these, plus the opportunity cost of tying up your down payment.
Why does the investment return rate matter so much?+
Because the renter invests the money a buyer would sink into a down payment and higher monthly costs. If that money earns a strong return, renting and investing can beat owning — especially over short horizons. If returns are modest or rent is high relative to buying, ownership pulls ahead. Adjust the investment-return and home-appreciation assumptions to see how sensitive the answer is.
Are these results a guarantee?+
No — they're a projection based on your assumptions about appreciation, rent growth, and investment returns, none of which are certain. Treat the output as a way to compare scenarios and understand the trade-offs, not a prediction. Small changes to the rate assumptions can flip the answer, which is exactly why it's worth modeling your own numbers.
Back to the full rent vs buy calculator.
A planning comparison, not financial advice — the result depends on assumptions that aren't guaranteed.