Rent vs Buy Calculator
Compare the true costs of renting versus buying a home. See breakeven analysis, opportunity cost, and how each choice affects your path to financial independence.
- Calculate breakeven year for buying vs renting.
- Apply the 5% Rule for a quick sanity check.
- See opportunity cost of your down payment.
- Compare net wealth over 5-30 years.
- Factor in house hacking rental income.
- Save and compare multiple scenarios.
Making the Right Housing Decision
The rent vs buy decision is one of the most significant financial choices you'll make. Neither option is universally better—the right choice depends on your circumstances, timeline, and market conditions. This calculator helps you see beyond the “throwing money away on rent” myth by comparing total costs and wealth accumulation over time. We factor in often-overlooked costs like opportunity cost on your down payment, transaction fees, and the flexibility value of renting.
The 5% Rule Explained
The 5% Rule is a quick way to estimate whether renting or buying is more economical. It suggests that the true cost of ownership is approximately 5% of the home's value annually:
Example: For a $500,000 home, the 5% annual cost is $25,000, or about $2,083/month. If you can rent a comparable place for less than $2,083, renting might be the better financial choice. This calculator provides a more detailed analysis accounting for appreciation, investment returns, tax benefits, and your specific timeline.
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