Rent or buy? Find the year it flips.

The model, stated plainly

Two households start with the same pile of cash — your down payment plus closing costs — and spend the same amount every year. One buys the house and spends that money on the mortgage, taxes, insurance, maintenance, HOA and PMI. The other rents, spends less on housing, and puts every dollar of the difference into investments earning the return you specified. At the end of your horizon we ask a single question: who is worth more?

For the owner, net worth is what the house sells for after selling costs, minus whatever's left on the mortgage. For the renter, it's the investment account. The break-even year is the first year the owner's number passes the renter's. Because both spend the same total, the difference between their net worth is exactly the difference in what the two paths cost.

This is why the opportunity cost of the down payment matters so much and why calculators that leave it out are useless. Forty-two thousand dollars sitting in a house is forty-two thousand dollars not compounding somewhere else. That foregone growth is a real cost of buying even though it never appears on a statement.

Worked example

The page loads with a $420,000 house at 10% down and 6.65% over 30 years, against $1,800-a-month rent. The loan is $378,000 and principal and interest come to about $2,427 a month, or $29,120 a year. Add $4,620 of property tax (1.1% of $420,000), $1,800 of insurance, $4,200 of maintenance (1% of value) and $2,268 of PMI (0.6% of the loan) and owning costs about $42,008 in year one — roughly $3,501 a month against the renter's $1,800.

So the renter invests about $1,701 a month on top of the $54,600 they didn't hand over at closing — $42,000 down plus $12,600 in closing costs. That head start compounds hard, which is why the owner spends the first several years behind: their equity is mostly the down payment they already had, minus the 6% it will cost to sell.

Change one input and watch it swing. Drop the years you'll stay to three and buying loses badly, because closing and selling costs alone are 9% of the price and appreciation hasn't covered them. Push rent to $2,600 and buying wins early, because the renter has nothing left to invest. That sensitivity is the answer — there is no universal verdict, only your local ratio of rent to price.

The assumptions doing the heavy lifting

Home appreciation and investment return are the two inputs that decide the outcome, and they are the two nobody can know. A percentage point either way moves the break-even year by several years. Try it: run the numbers with appreciation at 2% and again at 5% before you make a decision based on either.

Maintenance at 1% of home value per year is the standard rule of thumb, and it is an average across a house's life, not a schedule. You'll spend nothing for four years and then $14,000 on a roof. Old houses, and anything with a well, a septic system or original windows, run well above 1%.

Insurance, HOA and maintenance are all grown at the same rate as home appreciation. That is a simplification. Home insurance in particular has been rising faster than home values in a lot of the country, and HOA dues can jump by a special assessment with no warning at all.

What this leaves out

The mortgage interest deduction. With the 2026 standard deduction at $16,100 for single filers and $32,200 for joint filers, a large majority of buyers take the standard deduction and get no tax benefit from mortgage interest at all. Including it by default would flatter buying for most people. If you're confident you'll itemise, buying is somewhat better than shown here.

Rate changes. This assumes a fixed-rate mortgage held to the end of your horizon. If you'd refinance into a lower rate, owning improves. If you're considering an adjustable-rate loan, this model doesn't describe it.

Everything that isn't money. A landlord who won't renew, a school district, a commute, the freedom to leave in thirty days, the freedom to knock out a wall. Several of those are worth more than the number this calculator produces, and no spreadsheet will tell you which.

It also assumes you actually invest the difference. Most renters don't — they spend it. If you know yourself well enough to admit that, buying's forced savings is a genuine advantage that this model gives you no credit for.

When renting is simply the right answer

If you might move within three years, rent. Nothing else in this calculation outruns paying 3% to buy and 6% to sell inside thirty-six months. That's 9% of the purchase price gone before appreciation has had time to do anything.

If buying would take your emergency fund to zero, rent. A house with no cash behind it turns the first broken water heater into credit card debt, and the whole point of owning was supposed to be stability.

If the all-in monthly cost of owning is more than about a third of your take-home pay, rent and buy something cheaper later. House-poor is a real condition, and it doesn't improve on its own.

One concrete next step: get your county assessor's actual tax rate for the specific address and a real insurance quote for it, then re-run this. Those two inputs are where guesses do the most damage, and both take one phone call.