Rent vs Buy Calculator — Should I Rent or Buy a House? Cost & Break-even Comparison
Compare buying a home vs. renting it over your chosen time horizon. Break-even year, total cost and an interactive chart.
⚙️ Advanced
📚 Official sources
The calculator simulates both paths year-by-year: buying (down payment, mortgage, tax, maintenance, appreciation, sale at the end) vs. renting (rent plus investing the cash you'd otherwise lock up in a down payment). Whichever path leaves you wealthier at the chosen horizon wins. The classic trap is ignoring the opportunity cost of tying up cash in home equity instead of a diversified investment portfolio — this calculator corrects for that.
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How to use it
- Enter the home price, down payment %, mortgage rate and term.
- Enter your current monthly rent for a comparable place. Be honest — compare like-for-like.
- Open 'Advanced' to tune property tax, maintenance, appreciation and rent growth. Defaults are reasonable for most Western markets.
- Pick a time horizon. Shorter horizons favour renting; longer horizons favour buying (in stable markets).
How is rent-vs-buy break-even calculated?
The break-even year is the moment at which the cumulative cost of owning a home falls below the cumulative cost of renting plus the opportunity cost of the down payment that would have been invested instead. The classic methodology — popularised by The New York Times' interactive 'Is It Better to Rent or Buy?' calculator (2014, Bostock and Carter) — treats both paths as parallel year-by-year cashflow simulations. The buyer's path tallies down payment, monthly mortgage payment, property tax, homeowners' insurance, maintenance, HOA or condo fees, and one-off transaction costs at purchase and sale; the renter's path tallies monthly rent (rising with rent growth) plus the after-tax compounded return on the invested down payment plus the running difference between the buyer's and renter's monthly cash outflows. Whichever path leaves the household wealthier at the horizon wins.
On the ownership side the calculator splits each monthly mortgage payment into its principal and interest components using the standard amortization formula. The constant payment is PMT = P × r × (1+r)^n / ((1+r)^n − 1) where P is the loan amount (price minus down payment), r the monthly interest rate (annual rate / 12), and n the total number of monthly payments (term in years × 12). Each month, interest equals the outstanding balance times r, principal equals PMT minus that interest, and the balance shrinks accordingly. Principal payments build equity; interest does not. The IMF Global Housing Watch and Bank for International Settlements both stress that interest is a pure cost, not an investment, and modelling it as such is a frequent mistake in informal rent-vs-buy spreadsheets.
The recurring ownership costs are added on top. Property tax in the US averages roughly 1.1% of assessed value per year (effective rate, varies by state — Texas 1.6%, California 0.7%); UK Council Tax depends on band and council; Romania's impozit pe clădiri is set by local councils within the 0.08–0.2% band of impozabilă value (Codul Fiscal art. 457); Hungary's építményadó is municipal and capped by Act C of 1990; Germany's Grundsteuer was reformed in 2025 with new federal-state-specific multipliers. Maintenance ranges from 0.75–1.5% of home value yearly (the rule of thumb in Bogleheads' rent-vs-buy methodology). Homeowners' insurance is typically 0.3–0.5% of value. Putting these together, total ownership friction beyond the mortgage is often 2–3% of home value per year — a number that surprises many first-time buyers.
Transaction costs at purchase and sale are usually the single largest swing factor for short horizons. Romania's notary, registry, agent and impozit pe transfer fees add up to roughly 3–4% of price (impozit alone is 1% under Codul Fiscal art. 111). Hungary's vagyonszerzési illeték is a flat 4% on residential property up to 1 billion HUF (Act CXVII of 2007). Germany's Grunderwerbsteuer ranges by state from 3.5% (Bavaria, Saxony) to 6.5% (Brandenburg, Schleswig-Holstein, NRW), plus notary 1.5% and agent fees up to 7.14% (split since 2020 reform). France's frais de notaire on existing homes total 7–8% (most of which is droits de mutation, not the notaire's fee proper). The Netherlands' kosten koper add ~5–6% (overdrachtsbelasting 2% for owner-occupiers, plus notary, advisor, valuation). Spain charges ITP at 6–10% by region. The UK's Stamp Duty Land Tax is 0–12% depending on price band. The US averages 5–6% in agent commissions on sale plus ~1–3% in closing costs. These numbers are all baked into the calculator's defaults but you can override them in the 'Advanced' panel.
Mortgage-interest tax deductibility differs sharply between countries and shifts the break-even year by 1–3 years. The US allows deduction up to a $750,000 loan cap (post-TCJA 2017), with the SALT cap of $10,000 limiting state-and-local-tax benefit. The Netherlands has the hypotheekrenteaftrek, gradually reduced toward the 37.07% maximum bracket and limited to annuity or linear mortgages since 2013. Germany only allows deduction for rental investment property, not owner-occupied. France permits no general deduction. Romania and Hungary offer no general personal-residence interest deduction. The default calculation here does not apply tax breaks because effects depend on individual income, but you can simulate them by lowering the effective mortgage rate in the input field.
On the renting side, the model assumes the renter invests the initial down payment and any monthly cashflow gap (when buying is cheaper) into a diversified portfolio at the entered investment-return rate. The Federal Reserve Bank of Dallas, in its 2022 'Buying vs. Renting' research, modelled this as a Markowitz-style portfolio of US stocks and bonds returning 5–7% nominal long-run; OECD's housing statistics database gives 4–5% real for housing in most countries. With realistic numbers — say a 6% portfolio return vs 3% home appreciation — the renter's invested down payment grows materially faster than the buyer's home equity, and the break-even year moves out to 7–10 years for typical Western markets. In bubbly markets like 2021–2022 Lisbon, Berlin or Toronto, where appreciation ran at 8–12%, buying broke even almost immediately; once those markets normalised, the break-even moved back out.
Practically, the heuristic the NYT calculator made famous is 'if you'll stay 5+ years, buying usually wins; less than 3 years, renting almost always wins'. Our calculator reproduces that result for default parameters but lets you override any of the dozen inputs to test edge cases — paid-off mortgage, zero down payment, negative rent growth (deflation), extremely high HOA, and so on. The links in the next section point to the academic and central-bank sources behind every default value.
💡 Worked example
Home price: €300,000 · Down payment: 20% · Mortgage rate: 5% · 30-year term Rent: €1,200/mo · 3% yearly rent growth · 6% investment return · 10-year horizon → Monthly mortgage: ~€1,288 → Break-even year: ~year 8 → After 10 years, buying nets roughly €35,000 cheaper than renting.
Frequently Asked Questions
Why include an investment return for the renter?
The buyer's down payment is cash that could otherwise be invested. If the renter invests that same cash (and the yearly gap) at ~6% real, they build a portfolio that competes with the buyer's home equity. Ignoring this overstates the buying case.
Is the 3% appreciation realistic?
It matches long-run inflation-adjusted real estate in most developed markets. Real appreciation is closer to 1% when you subtract inflation. Short-term markets can run hotter, but for a 10+ year calculation 3% nominal is a safe default.
What about tax deductions?
Mortgage interest deduction exists in some countries (US, NL) but was gutted in many others (UK, HU). The default calculator doesn't model it because effects vary heavily by jurisdiction and individual tax position. Consult a local advisor.
Isn't buying always better long-term?
Not automatically. It depends on rent-to-price ratio, your return on invested cash, how long you'll stay, and local property costs. In high-price/low-rent cities (Zurich, Amsterdam, Singapore), renting often wins even over 20+ years.
How long do I need to stay for buying to beat renting?
The break-even horizon is typically 5–7 years in mid-sized markets, 7–10 years in expensive coastal cities, and 3–5 years in low-cost areas with low property taxes. If you might move within 3 years, transaction costs (5–10% on sale) usually wipe out any appreciation.
What counts as 'total cost of ownership' beyond mortgage?
Property taxes (0.5–2.5% of value/year), maintenance (1% rule), HOA/condo fees, home insurance, major repairs (roof, HVAC), and opportunity cost of the down payment. Together these often add 40–60% to the bare mortgage payment — most DIY spreadsheets miss them.
Should I include property tax in the calculation?
Yes — it's often the largest 'hidden' ownership cost. Rates vary wildly: 0.1% in Switzerland, 0.8–1.5% in most of Europe, up to 2.5% in some US states. Check your municipal rate; don't assume national averages.
Does this work if I'm paying cash (no mortgage)?
Yes, set the down payment to 100%. The main trade-off becomes opportunity cost: €300k in property vs €300k invested at 6% real. Over 30 years, the invested €300k at 6% grows to €1.72M; the property at 3% grows to €728k — but the property also gave you 30 years of rent-free housing.
How do interest rate changes affect break-even?
Each 1% rise in mortgage rates adds ~10–12% to the monthly payment on a 30-year loan, pushing break-even 1–2 years later. Falling rates compress it. Since you can refinance but not un-buy, buying is more sensitive to rate risk than renting is.
What if rents are rising much faster than home prices?
Then buying wins earlier — the renter faces compounding rent inflation while the buyer locks in a mostly fixed housing cost. In markets with 7%+ annual rent growth and stagnant prices (many European cities in 2023–2026), buying's break-even can fall below 5 years.