Rent vs Buy
Estimator

Most people assume buying is always better than renting because "you're throwing money away on rent." But that's not always true — and the math depends heavily on how long you stay.

When you buy: You build equity, benefit from appreciation, and eventually own the home free and clear. But you also pay property taxes, maintenance, insurance, interest, and transaction costs (6% when you sell).

When you rent: You pay rent that typically rises over time. But your down payment and any monthly savings can be invested in the stock market, which historically returns about 7% per year after inflation.

The breakeven point is usually 3-5 years. Stay longer than that, and buying typically wins. Sell sooner, and the transaction costs eat up any appreciation.

Buying a home costs about 2-3% of the purchase price in closing costs. Selling costs about 6% in realtor commissions. That's 8-9% of your home's value just in transaction fees.

If you buy a $400,000 home, you'll pay roughly $30,000 in combined transaction costs. If you sell after two years and the home has appreciated 3% per year ($24,000), you've actually lost money — the transaction costs exceeded your appreciation.

Hold for 10 years, and that same 3% annual appreciation grows the home to $537,000. Now the transaction costs ($32,000) are a fraction of your gains ($137,000).

The breakeven point: In most markets, buying beats renting if you stay at least 4-6 years. Under 3 years, renting almost always wins.

Scenario: Rent an apartment for $2,000/month or buy a comparable home for $500,000 with 10% down ($50,000) and a 6.5% mortgage.

After 5 years, buying wins by ~$25,000. After 3 years, roughly a tie. After 7 years, buying wins by ~$70,000.