# Rent or buy calculator: a free, detailed simulator

> Should you rent or buy your home? Compare your net worth in both cases, find the break-even year and the break-even rent. Free, no sign-up.

- Interactive version: https://simulkit.com/en/rent-or-buy
- Other languages: [Français](https://simulkit.com/fr/louer-ou-acheter.md)

Buying your home is not always better than renting. This calculator compares your net worth in both cases, year after year: mortgage, fees, upkeep, and what your savings would earn if you kept renting.

## Parameters

### Horizon

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Years before selling | `years` | 10 years | 1 year to 40 years | How long you keep the home before selling it. This is the horizon of the comparison. |

### Purchase

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Home price | `price` | $400,000 | $10,000 to $20,000,000 | Purchase price, before closing costs. |
| Down payment | `downPayment` | $90,000 | $0 to $20,000,000 | Cash you put in at purchase. It pays the closing costs first. The renter invests the same amount. |
| Closing costs | `purchaseFeesRate` | 3.0% | 0.0% to 20.0% | Buyer's closing costs as a share of the price, typically 2 to 5%. |

### Mortgage

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Mortgage rate | `loanRate` | 6.25% | 0.00% to 15.00% | Annual interest rate. |
| Loan term | `loanYears` | 30 years | 1 year to 40 years | Length of the mortgage. |
| Mortgage insurance (PMI) | `insuranceRate` | 0.00% | 0.00% to 2.00% | Yearly cost as a share of the amount borrowed. Usually 0 with a 20% down payment. |

### Owner costs

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Property tax | `propertyTax` | $4,400/year | $0 to $200,000 | Yearly amount. It grows every year with cost inflation. |
| HOA fees | `ownerFees` | $0/month | $0 to $20,000 | Monthly homeowners association fees. Use 0 for a home without HOA. |
| Maintenance | `maintenanceRate` | 1.0% | 0.0% to 5.0% | Yearly upkeep as a share of the home value. 1% is a common rule of thumb. |

### Renting

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Monthly rent | `rent` | $2,200/month | $0 to $100,000 | Rent for an equivalent home. |
| Yearly rent increase | `rentIncreaseRate` | 3.0% | 0.0% to 10.0% | Average rent growth per year. |

### Market and investments

| Parameter | URL key | Default | Range | Description |
|---|---|---|---|---|
| Home price growth | `appreciationRate` | 3.0% | -10.0% to 15.0% | Average yearly change of the home value. It can be negative. |
| Investment return | `investmentReturn` | 6.0% | -5.0% to 15.0% | Average yearly return of invested savings, before tax. |
| Tax on investment gains | `investmentTaxRate` | 15% | 0% to 60% | Tax paid on investment gains at the end, for example the long-term capital gains rate. |
| Cost inflation | `costInflationRate` | 2.5% | 0.0% to 10.0% | Yearly increase of the property tax and the HOA fees. |
| Selling costs | `sellingFeesRate` | 6.0% | 0.0% to 15.0% | Agent commission and other selling costs, as a share of the sale price. |

## Results with the default parameters

- Buying advantage: $39,710
- Net worth if buying: $234,067
- Net worth if renting: $194,357
- Break-even: 6 years
- Break-even rent: $1,975/month
- Monthly payment: $1,983/month
- Total cost of the loan: $391,739

## How the math works

The buyer and the renter start with the same cash. The buyer uses it as a down payment. The renter invests it.

Every month, whoever spends less invests the difference at the same return. The buyer pays the mortgage, insurance, property tax, HOA fees and upkeep. The renter pays rent.

At the end, the buyer sells the home, pays the selling costs and the remaining balance. Investment gains are taxed. The higher net worth is the better choice.

## The assumptions that matter most

How long you stay comes first. Buying and selling costs weigh heavily over a short period: under 5 to 7 years, renting often wins.

Then come the price-to-rent ratio, home price growth and the investment return. If your investments grow faster than home prices, the renter comes out ahead.

Create several scenarios, for example a cautious one and an optimistic one, and compare them side by side.

## Break-even year and break-even rent

The break-even year is how long you must keep the home for buying to beat renting.

The break-even rent is the starting rent at which both options end equal over your horizon. If your rent is higher, buying is the better deal.

## Frequently asked questions

### After how many years does buying beat renting?

It depends mostly on closing and selling costs, the price-to-rent ratio and home price growth. It is often between 5 and 10 years. The calculator finds that break-even point for your own numbers.

### Why does the renter invest the down payment?

To compare like with like. The cash the buyer puts down would stay available to the renter. Ignoring that investment would unfairly favor buying.

### Is the gain on the home sale taxed?

In the US, up to $250,000 of gain on a primary residence ($500,000 for married couples) is usually tax-free. The calculator applies no tax on the home sale, only on investment gains.

### How reliable are the results?

They are projections and depend entirely on your assumptions for home prices, returns and inflation. Test several scenarios to see how sensitive the result is, and get advice before a big decision.

### Are my numbers sent anywhere?

No. The math runs in your browser. Nothing is sent until you click Save or Share.

## Open it with your own numbers

Every parameter can be passed in the query string, using the keys above. For example:

https://simulkit.com/en/rent-or-buy?price=500000&downPayment=113000