- What's the break-even year?
- The break-even year is the first year where the total net cost of buying drops below the total net cost of renting. Before that year, renting is cheaper (the upfront down payment, closing costs, and ongoing expenses haven't been offset by appreciation and principal paydown yet). After that year, buying is cheaper (selling proceeds plus avoided rent payments outweigh the costs you paid as an owner). It's the cleanest single answer to "should I rent or buy?"
- Why does the answer change so much when I change the home price?
- Because most ongoing costs scale with the home value: property tax (% of value), insurance (% of value), maintenance (% of value), and the down payment + closing costs (also % of price). A more expensive home means more dollars going to non-equity costs every month — pushing the break-even year out further. A cheaper home flips the math faster because there's less drag from those percentage-based costs.
- What's the opportunity cost of the down payment?
- If you don't put $80,000 into a house, you could put it in the stock market. At a 6–7% annual return, that money roughly doubles every 10–12 years. The calculator includes this — the renter's net cost is reduced by the investment gains they earn on the equivalent down-payment-plus-closing dollars. Ignore this and buying looks artificially great. Include it and you get the honest comparison.
- Why does maintenance cost so much?
- The default is 1% of home value per year — for a $400,000 home, that's $4,000/year or $333/month. This covers HVAC repairs, roof replacement amortized over 25 years, appliances, paint, landscaping, and the random emergencies (a busted water heater, a tree on the deck). Some years you'll spend nothing; some years you'll spend $15,000. 1% is the industry average from surveys of long-term homeowners. Renters don't pay this — the landlord does.
- What selling cost should I assume?
- Around 6% in the United States is typical: realtor commission (5%, split between buyer's and seller's agent — though this is being unbundled post-2024 NAR settlement), plus closing costs, title insurance, transfer tax, and any concessions to the buyer. If you sell For Sale By Owner, you can drop to 1–3%. The default of 6% is conservative; lower it to 3% if you're confident in selling without an agent.
- Does it matter what mortgage term I pick?
- Less than you might think. A 15-year mortgage builds equity faster but the higher monthly payment offsets most of that advantage in the early years. A 30-year mortgage is the standard. The break-even year changes by 1–2 years across the typical range (15, 20, 30) — the input that swings the answer most is home appreciation, followed by rent growth, followed by mortgage rate.
- What if rent goes up faster than home appreciation?
- Buying wins sooner. Rent inflation hits you every renewal — set it to 4% in a hot market and the break-even year drops several years vs the 3% default. Home appreciation, by contrast, only matters when you sell. If your local rent growth has historically been higher than home appreciation, the calculator will show buying breaking even faster. The reverse is true in markets where home prices climb faster than rent.
- What about taxes? Doesn't owning save on taxes?
- The 2017 Tax Cuts and Jobs Act doubled the standard deduction (to $14,600 single / $29,200 married in 2024), so most homeowners no longer itemize — meaning the mortgage interest deduction effectively does nothing for them. The calculator doesn't model the tax deduction by default because it doesn't apply to most filers. If you're in a high-tax state with a high mortgage balance and you itemize, your effective break-even year will be a bit earlier than this calculator shows — call it 1–2 years.
- Should I use this for a rental property?
- No — this is for owner-occupied housing only. Rental properties have different math: rental income, depreciation, capital gains treatment, 1031 exchanges. Use a real estate investment calculator (cap rate, cash-on-cash return, IRR) for those. This tool is the question a renter asks before becoming an owner-occupier.
- What's the most important input?
- How long you plan to stay. Buying becomes cheaper than renting at some point — the question is whether that point is before or after you'd planned to move. Stay 3 years and you almost always lose money buying (closing costs and selling costs alone are ~10% of home price). Stay 30 years and buying almost always wins. The middle (5–15 years) is where the inputs actually matter — and where this calculator gives you a clear answer.
