Rent vs Buy Calculator: Break-Even & Net Worth

There is no universal answer, only a math problem for your market and horizon. If you plan to stay more than 5 to 7 years and the price-to-rent ratio is moderate, buying usually wins. Shorter horizons or extremely high ratios typically favor renting and investing the difference.

Swiftly projects two net-worth paths month by month. The buy path carries the home's value, minus selling costs and the capital-gains tax you would owe, plus any cash you invested when itemising beat the standard deduction. The rent path carries the invested down payment and deposit, adds or subtracts the monthly cash-flow difference, and grows at your market return. Break-even is the first month buying is ahead and stays ahead — a crossing that reverses does not count.

Seven percent nominal is a common planning assumption for a broad equity index, roughly 5% after inflation. Using a higher number biases the model toward renting, so stress-test at 5% and 9% to see how sensitive your conclusion is.

Rent itself builds no equity, but the alternative use of capital does. If the down payment and monthly savings are invested consistently, a renter can end up ahead. If the difference is spent, renting is strictly worse on wealth.

It is the single most sensitive input on the buy side. A one-point change in assumed annual appreciation moves the ten-year outcome by tens of thousands of dollars on a typical home. Use local data, not national averages, and test a pessimistic case.

Always. Budget roughly 1% of home value per year for maintenance and repairs, plus larger capital items. Renters avoid these costs entirely, which is why an apples-to-apples comparison must charge them to the owner.

Both are modeled as ongoing ownership costs proportional to home value, using state averages. In high-tax states like New Jersey or Illinois, they can add 1.5% to 2.2% of value annually and materially delay the break-even point.

A larger down payment lowers the mortgage payment and interest but ties up capital that could compound elsewhere. The net effect depends on whether your mortgage rate exceeds your expected after-tax investment return.

Significantly. The model compounds rent at your assumed growth rate while a fixed mortgage payment stays flat. Over 15 to 20 years, that divergence is often the largest single driver of the buy-side advantage.

Divide the purchase price by annual rent. Ratios under 15 generally favor buying, 15 to 20 is a toss-up depending on horizon, and above 20 renting usually wins unless you stay very long term.

The base model assumes an owner-occupied home with no rental income. Rental income on a room or an ADU, and the tax treatment that comes with it, is a different calculation — model it as a reduction in your effective monthly ownership cost and rerun the comparison at that lower number.

Yes. The deposit is entered in months of rent and returned to you at the end of the horizon, so it counts as invested capital rather than a cost. Renters insurance is charged monthly and never recovered. Both are small, but ignoring them flatters renting by a few thousand dollars over a decade.

PMI is charged as an annual percentage of the original loan balance each month until amortisation brings the balance to 78% of the original purchase price, at which point it stops automatically. If you put 20% or more down, no PMI is charged at all.

Today's money discounts every future dollar back at your inflation assumption, so the figures read like 2026 dollars instead of inflated ones. It never changes which option wins — both sides are discounted by the same factor — but it stops a 30-year projection from looking absurdly large and makes the monthly-gap comparison honest.

Yes. The gain above your $250,000 or $500,000 exclusion is taxed at your long-term capital-gains rate in the sale year, and that tax is deducted from the proceeds before the two net worths are compared. Under the exclusion the sale is tax-free, which is the more common outcome.

Very. A one-point change in appreciation or market return typically moves the ten-year gap by tens of thousands of dollars, and the break-even year can move by three or four years. Use the sensitivity grid to see the hold-period and rate cases before you treat any single break-even number as a decision.

Yes, explicitly. The calculator compares your itemised deductions — mortgage interest on acquisition debt up to $750,000, property tax inside the 2026 SALT cap of $40,400, and any other itemised amounts you enter — against the standard deduction of $16,100 single or $32,200 married filing jointly. Only the excess saves tax, at your marginal rate, and any refund is invested alongside the down payment. Most buyers find they get no benefit at all, which is the honest answer.