Renting and owning both give you a place to live, but what happens to your money can be very different. When you rent, your monthly payment pays for that month's housing, but it does not build equity for you. When you own, part of your mortgage payment can reduce what you owe, helping you build equity over time. If your home also increases in value, that appreciation can build even more equity and grow your net worth.
And don't assume you have to wait until you have a large down payment or thousands of dollars saved for closing costs. There are programs that may allow qualified buyers to purchase with little to no money out of pocket. Depending on the program, purchase price, and your individual situation, some buyers may be able to get into a home with $0 down and very little cash needed at closing.
That's why comparing rent to a mortgage payment only tells part of the story. This calculator shows you the bigger picture by estimating how principal paydown and potential appreciation can build over time. Instead of continuing to pay rent month after month, see what it could look like to take control of your housing costs, start building equity, and begin investing in your own financial future.
Fill In "Buying A Home"
Enter your estimated Home Price, Down Payment, Mortgage Rate, and Loan Term if you were buying today.
Fill In "Renting A Home"
Enter your Monthly Rent and the yearly Rent Increase you expect. That is what buying gets compared against.
What the home costs today
$80,000 upfront
Annual interest rate
How long the mortgage lasts
What you pay today
How much rent rises each year
Set Your Home Appreciation
In the appreciation section, set the yearly Home Appreciation rate. We default to 3%, below the 4.6% long-run historical average.
We default to 3% per year, below the 4.6% long-run historical average. See The Resources, Historical Data, And Charts
Every chart and total below updates as you type.
Same as the "years to stay" slider, 1 to 30 years.
$400,000 today, about $137,567 of growth.
Answer "How Long Do You Plan To Live In The Home?"
Move the slider to the number of years you expect to stay. That one input drives the bottom line, the break-even point, and every chart below.
Adjust the slider below to estimate the number of years you will stay in the home and we'll use that to compare the rent versus buying over that time frame.
With the seller paying $10,000, buying a home breaks even after 1 year, 6 months.
Set automatically from the tiered estimate for a $400,000 home. See the note at the bottom of the page.
In a buyer's market the seller may pay $8,000-$12,000 of your closing costs.
$10,400 estimated closing costs − $10,000 seller credit = $400.
Positive = points you pay to lower the rate. Negative = lender credit toward closing costs.
Rate becomes 6.000% (0.25% per point, a rule of thumb)
$80,000 down + $400 closing + $0 points
Why This Matters: a seller credit is cash you do not have to earn back, so it frees up money for your down payment and shortens your break-even point versus renting. Right now buying pulls ahead in 1 year, 6 months versus year 3 with no seller help. Everything below (the charts, the tables and the break-even) already uses these two numbers.
Review Your Results
Check Break-Even, Buying: Net Worth Created, Home Equity You Keep, and Rent You Don't Get Back, then the year-by-year cash flow below. Closing costs, seller credits, taxes, insurance, and upkeep live under Show Advanced Assumptions.
Buying Comes Out Ahead
By $243,613In 1 year, 6 months
Break-Even
1 year, 6 months
Buying: Net Worth Created
$237,518
Your equity after paying to buy and to sell.
Home Equity You Keep
$269,772
Includes $52,206 of principal you paid down.
Rent You Don't Get Back
$418,344
Rent buys housing, not home equity, and it is not recovered by the renter.
Rent covers a place to live, but none of it becomes home equity: $418,344 paid, $0 kept. Owning turns part of every payment into equity you get to keep, which is why the two numbers above are not the same kind of money.
Inverted view: each bar is buying minus renting (what you own by owning, less what you would have if you rented and invested the difference). Below zero you are still earning back the upfront costs. Above zero you are ahead by owning, which happens in year 2.
Closing Costs When You Buy (Total)
$10,400
Seller Credit Toward Your Closing Costs
− $10,000
Closing Costs You Pay
$400
Selling Costs When You Sell in Year 10
$32,254
The $400 in closing costs you pay is already counted: on the renting side that same cash stays invested and grows, so it is never charged to buying twice.
Buying Comes Out Ahead By $243,613 After 10 Years
The seller covering $10,000 of your closing costs pulls break-even to 1 year, 6 months - money you don't have to earn back.
Understanding Where Your Money Goes
See the charts below to understand exactly where rent payments go, how mortgage payments split into equity-building principal and interest, and how home appreciation can build wealth over time.
Your home value grows at 3% per year, compounded monthly on the current value rather than the original purchase price. We default to a conservative 3%, which sits below the historical long-run national trend, so the buying case is not propped up by an optimistic assumption. At $400,000 today, that puts your home near $537,567 in year 10, about $137,567 of growth. You can edit the rate and time horizon near the top of the page.
Cumulative Home Appreciation Trend, 1942 To 2025
Historical Average 4.6% Per Year
This chart compounds each year's nationwide home-price change, one year on top of the next, to show the long-term trend. U.S. home prices rose in 74 of the past 84 years. Stacking those yearly changes together works out to roughly 6,761% total growth since 1942, which is about a 5.2% compounded annual rate, while the simple average of the yearly percentages is 4.6%. Compounding is why the total looks so large: growth builds on the prior year's higher value, not on the 1942 price. This calculator still uses a more conservative 3% annual assumption. The big up years in the 1940s look flat here because they compounded off a much smaller base: a 24% gain on a 1946 home price is a few thousand dollars, while the same percentage today is worth tens of thousands. The line stays low early and steepens later even though the yearly percentages in the chart above were larger back then.
Historical Home Appreciation, 1942 To 2025
Historical Average 4.6% Per Year
There Are Peaks And Valleys, Up Years And Down Years. But when you average it all together, home values have trended steadily up, at roughly 4.6% per year historically. This chart shows each year's nationwide home appreciation rate, including the slowdowns and declines along the way. This calculator uses a more conservative 3% annual assumption. Declining years are shaded red.
Part of every mortgage payment creates equity for you that you get to keep. We like to refer to this as forced savings. Renting is effectively 100% interest: none of it comes back, nor do you have anything to show for it. Over 10 years you build $52,206 of principal (23% of what you pay the bank), versus $418,344 in rent you never see again.
Left column of each pair = your mortgage payment (principal + interest). Right column = rent for that same year. Hover or tap any year to see how it is calculated.
The renter has ZERO to show for the $418,344 they paid in rent over the last 10 years, while the home buyer finished with $269,772 in equity. This is why buying a home wins over renting, nearly every single day.
Buying tends to win if you plan to stay in the house roughly three to four-plus years, long enough for principal, appreciation and rising rents to outweigh closing and selling costs. And the win buying gets right now becomes even stronger when your payment is close to rent, or when you negotiate seller-paid closing costs to cut your cash to close. Exactly where that line falls depends on your rate, rent growth and appreciation. The numbers above are yours, not averages.
Renting usually wins if you are only going to be there a year or two, or you move frequently for work, because you never get enough time to earn back the closing and selling costs. It also wins when prices are flat and the costs of owning (taxes, insurance, repairs, HOA) run high. You keep flexibility and can invest your down payment elsewhere.
The calculator above starts from a $400,000 home with 20% down at 6% for 30 years, compared against $3,000 a month in rent rising 3% a year. Everything below reflects that scenario, and every figure updates the moment you change an input.
Month to month, renting often looks cheaper. Over time it usually is not. In the default scenario on this page, a $400,000 home with 20% down at 6% leaves the owner ahead by $243,613 after 10 years, even after closing costs and the cost of selling. Rent is effectively 100% interest: $418,344 paid over 10 years with nothing kept.
In this scenario buying passes renting in year 2. Break-even is the point where the equity you have built plus the appreciation on the home finally outweigh the money it took to get in and out: your closing costs up front and the cost of selling at the end. Early on renting looks better because those one-time costs hit immediately. After that, three things compound in your favor every month: principal paydown, appreciation, and rent that keeps rising while your principal and interest payment does not. As a rule of thumb, three to four-plus years in the home is usually enough. Two things pull the date meaningfully sooner: negotiating seller-paid closing costs, which cuts your cash to close without touching your equity, and buying when your payment is close to what you would pay in rent.
This calculator estimates closing costs on a tiered percentage of the purchase price: 3% up to $250,000, 2.75% to $350,000, 2.6% to $450,000, 2.5% to $550,000, and 2.35% above that. On a $400,000 home that is $10,400. A seller credit lowers what you bring to the table dollar for dollar, so a $10,000 credit leaves $400 for you to pay. It is an estimate, not an itemized quote.
Often yes. A seller credit toward your closing costs is negotiated in the purchase contract and is one of the most common concessions in the market, especially when a home has been listed for a while. Loan programs cap how much a seller can contribute, and the credit can only be applied to closing costs and prepaid items, not handed to you as cash or used for your down payment. The reason it matters so much here: a credit reduces the cash you bring to the table dollar for dollar while leaving the purchase price, your loan balance and your equity untouched, so it pulls your break-even point forward without costing you anything on the ownership side. A credit can also be used to buy your rate down, which lowers your payment for as long as you keep the loan. Enter the dollar amount in the closing cost baseline and every number on this page updates.
Rent buys you a place to live, but it builds no equity. Over 10 years at $3,000 per month rising 3% a year, that is $418,344 paid, with $0 to show for what you paid over the last 10 years. Part of every mortgage payment creates equity for you instead: $52,206 of principal in the same period.
Principal and interest, property taxes, homeowners insurance, maintenance, HOA dues, mortgage insurance when you put less than 20% down, closing costs (net of any seller credit), discount points or lender credits, home appreciation, and the cost of selling. On the renting side it includes rent with annual increases plus the investment return you would earn by investing your down payment and closing costs instead.
The default assumption is 3% per year, which is deliberately conservative next to the long-run national history of US home prices. It is an assumption, not a promise: home values move with local supply, jobs and rates, and they can fall in any given year. We use a modest rate so the comparison does not lean on optimism, and because the case for owning here does not depend on it, principal paydown and rising rent do most of the work. The appreciation card on this page charts the historical trend, links the source documents behind it, and lets you type in your own rate and time horizon to see how sensitive your break-even year really is to that number.
Figures reference the default scenario: break-even in year 2, cash to close $80,400.
Walks through all five pieces of a payment: principal, interest, property taxes, homeowners insurance and mortgage insurance, plus maintenance and HOA dues. It shows how much of your first payment goes to principal versus interest, when mortgage insurance drops off at 78% loan-to-value, and exactly how the calculator arrives at your total monthly cost and your cash to close.
Explains what closing costs actually pay for, the tiered percentage estimate this calculator uses (3% up to $250,000 down to 2.35% above $550,000), and who is allowed to pay them. It also shows how a negotiated seller credit lowers your cash to close dollar for dollar without touching your equity, which is why it is the fastest lever for pulling your break-even year forward.
Break-even is the month owning passes renting once closing costs, selling costs, principal paydown, appreciation and rising rent are all counted. This page works a real scenario month by month and ranks what actually moves the date: a seller credit, the gap between your payment and market rent, your rate, and the appreciation rate you assume.
A practical timeline for building both the down payment and the closing costs while you are still paying rent, including how much to set aside each month, why a smaller down payment with a seller credit can beat waiting years for 20%, and how mortgage insurance factors into that decision.
If you are looking at a low down payment, run the same comparison on FHA rules: 3.5% down, the 1.75% upfront mortgage insurance premium financed into the loan, annual MIP for 11 years or the life of the loan, and the 6% seller credit limit that pulls an FHA break-even year forward fastest.
Send your scenario to Michael Thayer and his team, or book a call directly below.
Prefer to talk it through? Pick a time that works for you.
Booking unlocks once you send your scenario, so Mike has your numbers before the call.
Your information is used only to respond to your mortgage inquiry and is not sold. This is not a loan application and does not constitute any type of formal loan approval.
Closing costs and the seller credit are set in the closing cost baseline just below: $10,400 in estimated closing costs, $10,000 paid by the seller.
About Closing Costs: closing costs are estimated using a tiered percentage of the purchase price: 3% up to $250,000, 2.75% from $250,001 to $350,000, 2.6% from $350,001 to $450,000, 2.5% from $450,001 to $550,000, and 2.35% above $550,000. This is not an itemized quote. Actual closing costs vary by lender, title and escrow company, county, and property, and typically include origination and underwriting fees, appraisal, credit and flood reports, title insurance and settlement fees, recording fees and transfer taxes, plus prepaid interest and escrow deposits for property taxes and homeowners insurance. Seller credits, lender credits, and down payment assistance programs can offset part of them. Your official figures come from a Loan Estimate issued after a full application.
Important Disclosure: this calculator is provided for general educational and illustrative purposes only. It is not a loan approval, a pre-approval, a rate lock, a Loan Estimate, an offer or commitment to lend, or a quote of any kind. All figures shown are estimates based on the assumptions you entered and are not guaranteed. Interest rates, payments, closing costs, taxes, insurance, home values, rents and investment returns change over time and will differ from these estimates. Actual loan terms depend on a complete application, credit review, income and asset documentation, property appraisal, program eligibility and underwriting approval. Nothing here should be interpreted as legal, tax, accounting or investment advice.
This is a simplified estimate. Actual results depend on taxes, closing costs, deductions, and your personal situation. Consult a licensed lender, tax professional and financial advisor before making a decision. Equal Housing Opportunity.