Common questions about the rent vs buy calculator, answered directly.
No. In high-cost cities where home prices are 30-40x annual rent, renting and investing the difference often outperforms buying even over 10-20 year horizons, depending on appreciation assumptions and investment returns.
Opportunity cost is what your down payment could earn if invested instead of used to buy a home. If you put $80,000 down and the stock market returns 7%/year, you're forgoing that growth. The calculator credits this to the renting side of the comparison.
The "break-even horizon" — where buying becomes cheaper than renting — typically ranges from 3-7 years depending on your market, transaction costs, and appreciation rate. The calculator shows you the total cost at your specific time horizon.
Tax deductions (mortgage interest, property tax), PMI if down payment is under 20%, closing costs (typically 3-5% of home price), and the psychological value of ownership stability. These can meaningfully affect the outcome — closing costs alone can add 1-2 years to the break-even period.
US home prices have appreciated roughly 3-4% annually on average, but with enormous geographic variation and boom/bust cycles. Using 2-3% is more conservative and more appropriate for long-term planning than using recent higher rates, which may not persist.
Use the rent vs buy calculator — free, no email required.