Rent vs Buy Formula Explained

It compares the total cost of renting against the total cost of owning over a chosen time horizon, accounting for the down payment, monthly payment, equity build-up, and appreciation.

The Formula

Buying carries large upfront costs — the down payment and closing costs — that renting avoids, so over short horizons renting often wins. Over longer horizons, equity and appreciation usually tip the balance toward buying.

The single biggest driver is how long you stay. The calculator's break-even point is the number of years after which owning becomes cheaper than renting; staying past it favors buying, leaving early favors renting.