🏠Should You Rent or Buy a Home?
Make your biggest financial decision with confidence. This calculator compares the true cost of renting vs. buying, including tax benefits, wealth building, opportunity cost, and break-even analysis.
We know buying a home involves a LOT of numbers — and it can feel overwhelming at first. That's completely normal. We've explained everything in plain, simple language, but we also acknowledge it's still a lot to take in. Our advice: try to fill in numbers as close to your real situation as possible. If it feels like too much, sit down with a friend or family member who has purchased a home and go through the results together — it will make a huge difference. At the end of the day, these are the real numbers behind one of the biggest financial decisions of your life, and understanding them puts you ahead of most buyers.
For informational purposes only — full disclaimer.
About You — Your Income and Finances
We need to know how much you earn and owe so we can figure out what you can afford.
$One Hundred Twenty Thousand
Your total salary before taxes. Include spouse/partner if filing jointly.
$Five Hundred
Add up all monthly minimums: car payment, student loans, credit cards, etc.
$Two Thousand Five Hundred
Not sure? Use 25% for most people. It's the % of each extra dollar that goes to taxes.
Longer stays generally favor buying
The Home You Want to Buy
Fill in the details of the home you're thinking about purchasing. Don't worry — you can change these numbers anytime.
$Five Hundred Thousand
= 20.0% of home price
Check your county's website or ask your realtor. US average is about 1.1%. = $458/mo
$One Hundred Seventy Five
Homeowner's insurance protects your house. Typically $100-300/month.
Monthly fee for shared amenities like pools, gyms, and landscaping. $0 if none.
$Two Hundred
Things break! Budget about 1% of your home's value per year for repairs.
Your Current Renting Costs
Enter what you're paying now so we can compare it against what you'd pay if you bought a home.
$Two Thousand Five Hundred
Your baseline rent for comparison
Landlords typically raise rent 3-5% each year.
$Twenty Five
Typically $15-30/mo
What We Assume About the Future
Nobody can predict the future, but these are reasonable estimates based on historical averages. Feel free to adjust them.
How much your home's value grows each year. US historical average is about 3-4%.
Average stock market (S&P 500) return is about 7% after inflation.
One-time fees when buying: appraisal, title search, lender fees. Typically 2-5% of price. = $15,000
When you sell: real estate agent commission (5-6%) + title & transfer fees.
Based on a 7-year time horizon with your inputs
What You'd Pay Each Month If You Buy This Home
| What You're Paying For | Before Tax Savings | Your Actual Cost |
|---|---|---|
Mortgage Principal The part of your payment that pays down your loan — this builds your home equity | $361.61 | $361.61 |
Mortgage Interest The cost the bank charges you for borrowing money — this is the bank's profit | $2,166.67 | $1,516.67 |
Property Taxes Annual tax your city/county charges on your home, paid monthly through your mortgage | $458.33 | $320.83 |
Home Insurance Protects your home from damage, theft, and liability — required by all lenders | $175.00 | $175.00 |
Maintenance Budget for repairs — things like fixing a water heater, replacing a roof, or painting | $200.00 | $200.00 |
| Total Monthly Payment If You Buy | $3,361.61 | $2,574.11 |
💰 Tax Savings — Money Back in Your Pocket! The government gives you a tax break on mortgage interest and property taxes. This reduces what you actually pay each month. | -$787.50 |
Year-by-Year Comparison — See How Each Option Plays Out
This is the most important section. We compare 3 paths you could take and show exactly what happens to your money each year.
By year 7, buying a home puts $23,506 more in your pocket than renting and investing in stocks — after paying all selling costs and taxes!
⚠️ And if you just rent and keep cash without investing? You'd have $90,747 LESS than buying. Doing nothing is the most expensive option.
Your rent of $2,500/mo increases by 3% every year. By year 7, rent would be $3,075/mo.
Your mortgage payment of $2,528.27/mo stays the same for all 30 years. Only property tax and insurance may change.
If you sell your home: The IRS lets you keep the first $250,000 of profit tax-free ($500,000 if married). Any profit above that is taxed at 15% (long-term capital gains rate based on your tax bracket).
If you sell S&P 500 investments: All profits (gains above what you originally put in) are taxed at 15% long-term capital gains rate. There is no exclusion like there is for a home.
Table 1: What Leaves Your Wallet Each Month — Rent vs. Mortgage
Notice how rent keeps going up every year, but your mortgage payment never changes.
| End of Year | Monthly Rent You'd Pay goes up 3% every year | Monthly Mortgage You'd Pay locked in — never changes | Difference how much more/less you pay by owning |
|---|---|---|---|
| 1 | $2,500 | $2,528 | +$28 |
| 2 | $2,575 | $2,528 | -$47 |
| 3 | $2,652 | $2,528 | -$124 |
| 4 | $2,732 | $2,528 | -$204 |
| 5 | $2,814 | $2,528 | -$285 |
| 6 | $2,898 | $2,528 | -$370 |
| 7 | $2,985 | $2,528 | -$457 |
Mortgage shown is principal + interest only. Your total monthly cost of owning (including taxes, insurance, etc.) is shown in Result 1 above.
Table 2: If You Sold Everything Today — What Would You Walk Away With?
Each row imagines you sell the home or cash out your stocks at the end of that year, after paying all fees and taxes.
| End of Year | What Your Home Would Be Worth growing at 3% per year | Your Stake in the Home (in dollars) home value minus what you still owe the bank | What Your Stock Market Account Would Be Worth if you invested your down payment + monthly savings instead | Tax You'd Owe If You Sell the Home first $250K profit is tax-free, then 15% | Tax You'd Owe If You Sell Your Stocks 15% on everything you earned | You Walk Away With if You Bought after selling home, paying off loan, fees & taxes | You Walk Away With if You Rented + Invested after selling stocks & paying taxes on profits | Which One Wins? |
|---|---|---|---|---|---|---|---|---|
| 1 | $515,000 | $119,471 | $134,686 | $0 | $1,359 | $88,571 | $133,327 | RENT |
| 2 | $530,450 | $139,691 | $144,422 | $0 | $2,819 | $107,864 | $141,603 | RENT |
| 3 | $546,364 | $160,695 | $154,862 | $0 | $4,385 | $127,913 | $150,477 | RENT |
| 4 | $562,754 | $182,516 | $166,057 | $0 | $6,064 | $148,751 | $159,993 | RENT |
| 5 | $579,637 | $205,193 | $178,062 | $0 | $7,865 | $170,415 | $170,197 | BUY |
| 6 | $597,026 | $228,765 | $190,934 | $0 | $9,796 | $192,943 | $181,138 | BUY |
| 7 | $614,937 | $253,272 | $204,736 | $0 | $11,866 | $216,376 | $192,870 | BUY |
All amounts are after selling costs (6% for home) and capital gains taxes. Home sale uses the $250K tax-free exclusion.
Table 3: What if you rent and just keep your money as cash? (No stock market investing)
Many people don't invest in the stock market. This shows what happens if you simply save your money in a bank account instead of buying a home — no investing, just cash.
End of Year | Cash You'd Have Saved down payment + monthly savings, sitting in a bank | If You Buy a Home and Sell It Now, You Walk Away With after selling home, paying off loan, fees & taxes | Buying Puts You Ahead By positive = buying wins, negative = renting wins | Which One Wins? |
|---|---|---|---|---|
| 1 | $125,629 | $88,571 | -37,058 | RENT |
| 2 | $125,629 | $107,864 | -17,765 | RENT |
| 3 | $125,629 | $127,913 | +2,284 | BUY |
| 4 | $125,629 | $148,751 | +23,122 | BUY |
| 5 | $125,629 | $170,415 | +44,786 | BUY |
| 6 | $125,629 | $192,943 | +67,314 | BUY |
| 7 | $125,629 | $216,376 | +90,747 | BUY |
Without investing, most renters fall behind buyers significantly because cash loses value to inflation while home equity grows.
🎯 The Bottom Line — After 7 Years
Can You Comfortably Afford This Home?
This might be too much — consider reducing the price
This home may be out of your comfortable range. Consider a lower purchase price, larger down payment, or paying off debts first.
How Long Do You Need to Stay to Make Buying Worth It?
When you buy a home, you pay closing costs and agent fees. If you sell too soon, those fees can wipe out any profit. This section shows how long you need to stay for buying to make financial sense.
✅ Great news! Your home only needs to grow -0.3% per yearin value for you to break even. That's below the US average of 3-4%, so the odds are in your favor.
What if you stay longer or shorter?
The longer you stay, the easier it is to break even. The percentage below shows how fast your home's value needs to grow each year — lower is better. Green means you're likely fine, yellow means it's close, red means it's risky.
📖 Want to Learn More?
Explore our comprehensive guides to understand every aspect of the rent vs. buy decision.
“The best time to understand your finances is before you make the biggest purchase of your life.”
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DISCLAIMER: All calculations, projections, and analysis on this website are estimates for informational and educational purposes only. This is NOT financial, tax, legal, or real estate advice. Results are based on assumptions that may not reflect your actual situation. You use this tool entirely at your own risk. ZAXIS Ventures LLC, its owners, employees, and affiliates accept no responsibility or liability whatsoever for any financial decisions you make based on information from this website. Always consult qualified professionals before making real estate or investment decisions. By using this site, you agree to our Terms of Use and Disclaimer.