What is the break-even year for renting vs buying?

The break-even year is the point when the total net cost of buying (all costs minus equity) equals the total net cost of renting (all rent paid minus investment portfolio). On a $400,000 home with 20% down at 6.1%, the break-even typically falls between years 5 and 8, depending on local home appreciation and your investment return assumption. Use this calculator to find your specific number.

How much of a down payment do I need to buy?

Conventional loans require as little as 3% down for first-time buyers. FHA loans require 3.5%. VA and USDA loans offer 0% down for qualified borrowers. A 20% down payment eliminates private mortgage insurance (PMI), which typically costs 0.5–1.5% of the loan amount per year. On a $400,000 home, PMI adds $167–$500/month until you reach 20% equity — a significant factor in the rent vs buy comparison.

What hidden costs does buying a home include?

Beyond the mortgage payment, buyers pay property taxes (averaging 1.1% of home value per year nationally), homeowners insurance (~$1,500/year), maintenance (budget 1% of home value annually — $4,000/year on a $400,000 home), HOA fees if applicable, and closing costs (typically 2–5% of the purchase price). These hidden costs often add $600–$1,200/month to the true cost of ownership vs the mortgage payment alone.

How does home appreciation affect the rent vs buy decision?

Home appreciation is the most powerful factor for buyers. The national long-run average is approximately 3–4% per year. At 3% appreciation, a $400,000 home grows to $478,000 in 6 years — a $78,000 gain. That equity gain dramatically shortens the break-even. In fast-appreciating markets (5%+), buying almost always wins within 3–5 years. In flat or declining markets, the break-even can stretch to 10+ years.

How does Beycome change the rent vs buy math?

Beycome's buyer program gives you up to 2% of the purchase price back at closing. On a $350,000 home, that's up to $7,000 — cash you keep. This reduces your effective out-of-pocket cost, lowers your break-even year, and can be applied directly to principal to cut interest costs further. Beycome also charges only 1% (vs the traditional 3% buyer agent commission), meaning the full 3% seller concession flows back to you instead of to an agent.

Rent vs buy
calculator.

Is it cheaper for you to rent or buy?
We'll show you how many years it will take before the cost of buying
equals the cost of renting — the breakeven horizon.

Your details

What's your purchase price target?

$400k

$0$2.5M

Down payment capacity

20%

0%100%

Comparable monthly rent

$1,800

$0$10k

+ Show other costs

Below are other factors we've taken into consideration. They're pre-filled with the averages for your location and can be adjusted to match your situation.

Growth rates

First-year home value forecast ?Expected annual home value increase. The long-run national average is ~3-4%.

0%20%

First-year rent forecast ?Expected annual rent increase percentage. Historically 3-5% nationally.

0%20%

Investment rate ?If renting, what annual return could your down payment earn invested? 6% represents a balanced stock/bond portfolio.

0%20%

Buying expenses

Expected interest rate ?Your expected annual interest rate. Check current 30-year fixed rates.

HOA fees ?Monthly HOA fees if applicable. Leave at 0 for single-family homes without an HOA.

$ /mo

Property tax rate ?Annual property tax as a % of home value. National average ~1.1%.

Maintenance & repairs ?Annual maintenance as a percentage of home value. 0.5-1% is typical.

Estimated closing cost ?Closing costs as a percentage of the purchase price. Typically 2-5%.

Selling costs ?Costs when selling: agent commissions, transfer taxes, etc. Typically 6-10%. With Beycome, as low as 3%.

Insurance ?Annual homeowner's insurance premium.

Marginal tax rate ?Your marginal income tax rate. Used to estimate the tax benefit of mortgage interest deduction.

Renovations / upgrades ?Annual budget for home improvements and renovations beyond routine maintenance.

Rental expenses

Utilities ?Monthly utility costs when renting (electric, gas, water, internet).

$ /mo

Broker fee ?Monthly amortized broker fee for rental. In most markets this is $0.

$ /mo

Renter's insurance ?Monthly renter's insurance premium. National average ~$15-25/month.

$ /mo

Buying will never be cheaper than renting.

Net costs over years

Buy

Rent

Year	Buy	Rent	Rent gain
3	—	—	—

Cost: —

Gain: —

Bottom line: —

💰

With Beycome buyer program*

Get 2% back at closing — reduces your upfront cost and moves your break-even year earlier.

Traditional buyer agent commission (~3%) $12,000

Beycome rebate (up to 2% back to you) $8,000 back

Effective upfront savings $8,000

Discover our buyer program

How to use this calculator.

The rent vs buy decision is one of the biggest financial choices you'll make. This calculator compares the true net cost of each path — including equity, investment returns, and all hidden ownership costs.

Enter the home price and your down payment.

Use the actual asking price or your budget. Your down payment percentage determines both your loan amount and the opportunity cost — the returns you forgo by not investing that money.

Set your mortgage rate, tax rate, and ownership costs.

Property tax (national average ~1.1%), homeowner's insurance (~$1,500/yr), maintenance (budget 1% of home value/yr), and HOA fees are all factored in. These hidden costs often add $600–$1,200/month beyond the mortgage payment.

Enter your comparable rent and annual rent increase.

Use what you would actually pay to rent a comparable home in the same neighborhood — not your current rent. Rent inflation (historically 3–4%/yr nationally) compounds against renters over time and is a major factor in the break-even calculation.

Set how long you plan to stay.

This is the single most important variable. Buying has high upfront costs that take years to recover. If you stay fewer than 4 years, renting almost always wins. Beyond 7–10 years, buying typically wins decisively. The break-even year is where those two paths cross.

Read the break-even year and switch to year-by-year view.

The Summary tab shows your break-even year and net cost comparison at your chosen horizon. The Year-by-Year chart shows both lines so you can see exactly when they cross. The Full Breakdown table gives every year in detail.

Buy your next home with Beycome and get up to 2% back at closing.*

We keep 1% of the seller-paid commission and
credit the rest back to you.*

Start savvy buying now

* Beycome Buyer Program: In a traditional transaction, the seller typically pays ~3% to the buyer's agent. With Beycome, we keep 1% and credit the rest (up to ~2%) back to you. Any amount above our 1% fee is returned to you. Credits vary by price, state laws, and market conditions. If no commission is offered by the seller, a minimum fee of $1,599 applies to the buyer.

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The real math behind rent vs. buy.

Most people compare the wrong numbers. They look at monthly mortgage vs. monthly rent and ignore three critical factors: upfront costs, hidden ownership costs, and the opportunity cost of the down payment. Understanding how to get a mortgage is the first step to making an informed decision.

The true cost of buying

On a $400,000 home with 20% down at 6.1%: monthly mortgage is ~$1,940. But add property tax ($367/mo at 1.1%), insurance ($125/mo), and maintenance ($333/mo at 1%/yr), and the true monthly cost is $2,765/month — not $1,940. Amortization means most of your early payments go to interest, not principal.

You also pay $80,000 down + $12,000 in closing costs on day one — $92,000 before making a single mortgage payment.

The true cost of renting

Renting at $1,800/month looks cheaper — and it is, in year one. But rent increases ~3%/year. By year 10, that same apartment costs ~$2,418/month. Meanwhile, your mortgage payment stays fixed (if you chose a fixed rate). Rent inflation is the slow erosion that makes buying increasingly attractive over time.

The renter's advantage: that $92,000 upfront cost, invested at 6%/year, grows to ~$165,000 in 10 years. This opportunity cost is real — and our calculator factors it in. Learn more about home equity lines of credit for ways to access equity later.

How the break-even is calculated

Net cost to buy at year N = all cash paid (mortgage + tax + insurance + maintenance + HOA + upfront costs) minus home equity (appreciation + principal paydown) plus estimated selling costs (3% with Beycome).

Net cost to rent at year N = all rent paid minus investment portfolio (down payment + monthly savings invested at your chosen return rate).

The break-even year is when net cost to buy drops below net cost to rent. Beyond that year, every additional year you own, buying gets further ahead. Choosing between a 15-year vs 30-year mortgage significantly affects this timeline.

A real comparison: $400,000 home vs. $1,800/month rent

At Year 3

Renting wins

High upfront costs haven't been recovered. Net cost to buy ~$85k vs renting ~$30k.

At Year 7

Near break-even

Equity builds, rent inflation adds up. The two paths start converging fast.

At Year 12+

Buying wins

Equity is substantial, rent has risen 43%, fixed mortgage stays the same.

Resources.

Everything you need to make a confident rent vs. buy decision.

Mortgage basics

Getting approved

Loan types & tools

Frequently asked questions.

Is it better to rent or buy a home? +

It depends entirely on how long you plan to stay. Buying has high upfront costs — down payment, closing costs, maintenance — that take years to recover through equity and appreciation. If you stay fewer than 4–6 years, renting is usually cheaper. Beyond 6–8 years, buying typically wins decisively. Read our tips for first-time home buyers for more guidance.

What is the break-even year? +

Does renting throw money away? +

What hidden costs does buying include? +

How does home appreciation affect the decision? +

What is the opportunity cost of a down payment? +

How much down payment do I actually need? +

How does Beycome change the math? +