How this calculator works
Most rent-vs-buy comparisons just stack a mortgage payment next to a rent check, which misses the bigger picture. This one tracks net worth for both paths, year by year, so it accounts for the money you're not thinking about.
On the buying side, your net worth in any given year is your home's projected value, minus what you still owe on the mortgage, minus the cost of actually selling (agent fees, closing costs — typically 6-8% of the sale price). That last part matters: home equity you can't access without a sale isn't quite the same as cash.
On the renting side, your net worth is whatever you didn't spend on the down payment and closing costs, plus every month buying would have cost you more than renting did — all of it invested at the return rate you set. If renting is cheaper month to month, that gap compounds over time.
The breakeven year is the first year the buying line crosses above the renting line. Before that year, renting has kept more money in your pocket (accounting for what it could have earned elsewhere). After it, owning wins.
What this doesn't account for
No calculator can price in things like how long you'll actually stay, job mobility, what a home means to your day-to-day life, or local market swings that don't follow a steady appreciation %. Treat the breakeven year as a financial anchor point, not the whole decision.
Frequently asked questions
How is the rent vs. buy breakeven year calculated?
The calculator tracks two net worth totals year by year: what a buyer would have (home value minus remaining mortgage and selling costs) and what a renter would have (their down payment plus every monthly dollar they saved by renting, invested at your chosen return rate). The breakeven year is the first year the buyer's net worth overtakes the renter's.
Does this include closing costs and selling costs?
Yes. Closing costs are added to the buyer's upfront cash outlay, and selling costs are subtracted from the home's value when calculating the buyer's net worth in any given year, since that's the cost of actually accessing that equity.
What if I don't know my future investment return rate?
A long-run stock market average of 6-7% after inflation is a common planning assumption, but you can lower this if you'd keep the money somewhere more conservative, like bonds or a high-yield savings account.