True opportunity cost modeling
Accounts for what happens if your down payment and monthly savings are invested in an index fund yielding 6–8% annually.
Rent vs Buy Break-even Calculator
Comprehensive rent vs buy break-even calculator. Compare 30-year net worth of homeownership vs renting and investing the difference in stocks.
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How to use Rent vs Buy Break-even Calculator
- 1
Enter home purchase price, down payment percentage, mortgage interest rate, and amortization.
- 2
Enter ongoing homeownership costs: property tax rate, annual home maintenance (typically 1%), and home insurance.
- 3
Enter current monthly rent, annual rent inflation, and expected investment return if renting (investing the down payment and monthly cash flow difference in index funds).
- 4
Review the break-even year when buying becomes more profitable than renting.
- 5
Analyze the 30-year net worth projection chart comparing total home equity against the renter's investment portfolio.
Why use this tool?
Unrecoverable costs calculation
Compares the "unrecoverable" costs of buying (mortgage interest, property taxes, maintenance, closing costs) directly against rent.
Visual 30-year net worth graph
See the crossover point where accumulated property equity overtakes the compounding renter portfolio.
Frequently asked questions
What is the 5% rule for renting vs buying?
The 5% rule created by Ben Felix estimates that unrecoverable annual costs of homeownership total approximately 5% of the property value: 1% property tax, 1% maintenance, and 3% cost of capital (mortgage interest + equity opportunity cost). If renting an equivalent home costs less than 5% of its purchase price per year, renting is financially advantageous.
Why doesn't buying a home always build more wealth than renting?
In early mortgage years, the majority of monthly payments go toward interest rather than equity. Additionally, homeowners bear closing fees (2–5% to buy, 5–6% to sell), property taxes, and structural maintenance. If a renter invests their down payment in diversified equities that historically yield 7–10%, they can often outperform home equity growth.
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