Rent vs Buy Break-Even Calculator

How it is calculated

The tool models a 30-year fixed mortgage and compares cumulative costs year by year for up to 30 years. Buying cost = down payment + 3% closing costs + mortgage payments + ownership costs − equity. Ownership costs are the yearly percentage you enter (tax, insurance, maintenance) times the home value, and equity is home value × 0.94 − loan balance, which allows a 6 % selling cost. Renting cost is the rent, growing at the rent growth rate each year. The break-even is the first year in which buying costs less; if that never happens within 30 years the result reads 30+, and the two cost figures are then those of year 30. Appreciation, rent growth and ownership cost default to 3 %, 3 % and 2 % when left empty. Down payment must be 0 to 100 %, ownership cost 0 to 100 %, and price and rent above zero; otherwise there is no result. Mortgage interest tax relief and the investment return on the down payment are not modelled, and rules and costs differ by country.

Common mistakes

• Reading the break-even as the time to recover the down payment. It compares total net costs, including interest, upkeep, closing and selling costs.
• Entering the rent of a smaller or poorer home than the one being bought, which makes buying look worse than it really is. Compare like with like.
• Entering the down payment as a money amount instead of a percentage. The field accepts 0 to 100 only, so 80000 gives no result.
• Entering the appreciation as a decimal such as 0.03 instead of 3. It would be read as 0.03 % a year.
• Treating the result as a forecast. It uses constant growth rates over the whole period, but real prices, rents and rates change from year to year.