How the comparison is scored
Renting's cost is simply every rent check, with annual increases. Buying's cost is everything paid out — down payment, mortgage payments, property tax, maintenance — minus the equity you end up holding (home value after appreciation, less the remaining loan). That equity credit is what makes the comparison fair: a mortgage payment is part expense (interest) and part forced savings (principal).
The 5-year rule and why time horizon dominates
Buying carries heavy fixed tolls this calculator deliberately leaves out of the headline: ~2-5% closing costs going in and 6-8% selling costs coming out. Those tolls need years of appreciation and principal paydown to amortize, which is why staying under ~5 years usually favors renting even when the monthly math says "buy." The longer you stay, the more buying wins; the more likely you are to move, the more renting's flexibility is worth real money.
Numbers worth pressure-testing
The result is most sensitive to appreciation and rent growth — and both are guesses. US homes have averaged roughly 4% nominal appreciation long-term, but a decade of flat prices is historically common. A useful sanity check is the price-to-rent ratio: home price divided by annual rent for a similar place. Under ~15, buying usually wins; over ~20, renting deserves serious respect. Also remember the down payment has an opportunity cost — $70,000 in an index fund at 7% would be ~$112,000 after 7 years, which this simple comparison doesn't count against buying.
How to use this calculator
On the renting side, enter your monthly rent and its expected annual increase. On the buying side, enter the home price, down payment, mortgage rate, property tax, annual maintenance, and an appreciation estimate — then set the number of years you expect to stay, which is the input that decides most outcomes. The calculator totals each path's net cost over that horizon, crediting the buyer's ending equity, and names the cheaper option. Run it more than once: try a pessimistic 2% appreciation and a shorter stay to see whether buying still wins. If the verdict flips easily, the honest answer is that it depends on how long you stay and what the market does — itself useful to know before signing anything.