Should You Rent or Buy?

The breakeven point is the year when your cumulative cost of buying drops below the cumulative cost of renting. Before that year, renting is cheaper in total; after it, buying has cost you less. It factors in your down payment, mortgage payments, property tax, maintenance, and the opportunity cost of not investing your down payment — versus rent payments and insurance. The shorter the breakeven, the sooner buying makes financial sense.

When you buy, you lock up your down payment and closing costs in an illiquid asset. If you had rented instead, that lump sum could be invested — say in an index fund earning 7% per year. This calculator tracks that lost investment growth as an "opportunity cost" and credits it to the renting side, making the comparison fair. It's one of the most commonly ignored costs in rent vs buy decisions.

Private Mortgage Insurance (PMI) is required by most lenders when your down payment is below 20% of the home price. It typically costs 0.5–1% of your loan balance per year, added to your monthly payment. PMI automatically cancels once your loan balance drops to 80% of the home's value — this calculator shows you exactly which year that happens for your scenario.

Yes — but only the marginal benefit beyond the standard deduction. In 2024, the standard deduction is $29,200 for married filing jointly ($14,600 single). You only benefit from itemizing if your mortgage interest plus property tax exceeds that threshold. The calculator computes your estimated annual deduction benefit using the marginal tax rate you set, and subtracts it from your buying costs each year.

Buying has large upfront costs — closing costs (2–5%), down payment, and selling costs (5–7%) when you eventually leave. Those fixed costs get amortized over more years the longer you stay, while your rent would keep compounding upward. Additionally, home equity grows and the mortgage balance shrinks, so net worth from buying typically improves substantially after year 5–7. Short horizons (under 3–4 years) almost always favor renting.

This calculator uses standard financial formulas — a fixed-rate amortization schedule, compound appreciation, and compounded investment returns. It produces a reasonable estimate for planning purposes. However, real-world results vary due to local market conditions, tax law changes, actual maintenance costs, and credit score affecting your mortgage rate. Always treat this as a starting point for a conversation with a licensed financial advisor or mortgage professional.