Should I Rent or Buy?

It depends on your local market, how long you plan to stay, and current interest rates. In the short term, renting is almost always cheaper because buying involves large upfront costs and early mortgage payments are mostly interest. However, buying typically becomes cheaper after 4-7 years as you build equity through principal payments and home appreciation. Use the calculator above to find your specific break-even point.

The break-even point is the year when the total cost of buying (mortgage payments, taxes, insurance, maintenance, minus equity gained) drops below the total cost of renting (rent plus renter's insurance). This typically occurs between 4-7 years, but it varies widely based on home prices, rent levels, interest rates, and appreciation rates in your area.

For renting: monthly rent (with annual increases) and renter's insurance. For buying: mortgage principal & interest, property taxes, homeowner's insurance, maintenance, HOA fees, and PMI (if applicable). It also accounts for the opportunity cost of your down payment (what it could have earned if invested) and the equity you build through principal payments and home appreciation.

Home appreciation builds equity on top of your principal payments, making buying more attractive over time. Historically, U.S. home prices have appreciated about 3-4% per year on average, though this varies significantly by location and time period. Higher appreciation strongly favors buying, while stagnant or declining prices favor renting.

If you plan to move within 3-5 years, renting is often the better financial choice. Buying involves significant transaction costs (closing costs at purchase and sale, agent commissions), and most of your early mortgage payments go toward interest rather than building equity. The longer you plan to stay in one place, the more buying makes sense financially.