Should I rent or buy? Find your break-even point and true homeownership costs vs renting in 2025 — including opportunity cost, equity, taxes, and appreciation.
True cost comparison with break-even analysis
Renting
Buying
Market & Financial
The rent vs buy decision is one of the most significant financial choices an American family makes, and the answer depends heavily on how long you plan to stay, your local housing market, and what you'd do with the down payment if you didn't buy. This calculator computes the total cost of renting (monthly rent, annual increases, renters insurance) and the total cost of buying (mortgage, property tax, insurance, maintenance, closing costs, HOA) over your chosen time horizon — then factors in the opportunity cost of the down payment. The break-even point is the year at which cumulative buying costs become cheaper than cumulative renting costs.
In high-cost US metros like San Francisco, Los Angeles, and New York City, rent vs buy break-even points often extend to 8–12 years due to high home prices relative to rent. In lower-cost markets like Atlanta, Houston, or Phoenix, break-even can be 3–5 years. The 2025 housing market — with 30-year mortgage rates near 6.4% and median home prices still elevated — means many buyers need to plan for longer holding periods before buying beats renting financially. Home appreciation assumptions matter enormously too: at 5%/year, a $400,000 home grows to $661,000 in 10 years; at 2%, it only reaches $488,000.
An $80,000 down payment invested at 7% in the stock market grows to $157,000 in 10 years. This is a real cost of buying — money locked in your home that can't compound in a diversified portfolio.
Every mortgage payment builds equity through principal paydown. Combined with home appreciation, buying creates wealth renting cannot replicate — but only if you stay long enough to recoup closing costs and upfront fees.
Buying costs are front-loaded: 2%–3% closing costs plus a large down payment. The longer you stay, the more those upfront costs are amortized. US national break-even averages 4–7 years depending on market conditions.
Add property tax (1%–2%/year), insurance ($1,500–$3,000/year), maintenance (1% of value/year), and HOA to your mortgage payment. For a $400,000 home, total monthly costs often run $1,000–$1,500 above just the mortgage payment.
The rent-versus-buy comparison is routinely mis-framed as "rent is throwing money away", which ignores that much of an early mortgage payment is also unrecoverable. Interest, property tax, insurance and maintenance are all costs that build no equity — only the principal portion does. The honest comparison sets rent against those unrecoverable ownership costs plus the opportunity cost of the down payment, and then accounts for transaction costs, which are substantial: roughly 2–5% to buy and 6–10% to sell. Those costs are what create a break-even horizon, typically five to seven years.
Unrecoverable ownership cost = interest + property tax + insurance + maintenance + HOAPlus opportunity cost = down payment × expected investment returnCompare against annual rentBreak-even years ≈ transaction costs ÷ annual advantagewhere:
Assumptions: Excludes appreciation, which is genuinely uncertain and dominates the result over long periods. Renting also carries risk: rent rises while a fixed mortgage payment does not.
Compare first-year unrecoverable costs on both sides.
ResultOwning costs $13,714 more in year one, before any appreciation
Buying wins only if appreciation and principal repayment exceed that gap — at 3% growth the home gains $14,400 in year one, which roughly closes it. But selling costs of 7% ($33,600) mean the break-even sits around year five or six. Below that horizon renting is usually the better financial choice, whatever the cultural pressure says.