Rent vs. Buy Calculator (5-Year Horizon)
Calculate the 5-year net cost of renting vs. buying a home. Compare total ownership costs against rent plus opportunity cost to find your break-even year.
Calculator Free · Private
Your recent calculations
Data updated:
Reviewed by: Martín Rodríguez (editorial policy ) · Last reviewed:
Result
5-Year Net Cost of Buying
5-Year Net Cost of Renting
Difference (Buying minus Renting)
Estimated Break-Even Year
Monthly Mortgage Payment (P&I)
Estimated Home Value at Year 5
Equity Built at Year 5 (after selling costs)
Summary
See step-by-step calculation
Educational tool, not investment advice. Consult a licensed financial advisor before making decisions.
Was this calculation helpful?
Thanks! Your feedback helps us improve.
Your result
—
Buying a home feels like the "right" financial move — but over a 5-year window, renting is often cheaper once you account for closing costs, property taxes, maintenance, and the opportunity cost of your down payment. This calculator runs both scenarios month by month, then shows you the 5-year net cost of each path and the break-even year when buying starts to win.
When to use this calculator
- Deciding whether to buy now or wait and keep renting
- Evaluating a job relocation: is it worth buying if you may move in 3–5 years?
- Comparing two cities with different price-to-rent ratios
- Stress-testing a purchase against different appreciation and rate assumptions
- Presenting a rent-vs-buy analysis to a financial advisor or partner
Worked Example: 5-Year Rent vs. Buy Cost Breakdown
| Cost Component | Buying | Renting |
|---|---|---|
| Down payment (10% of $400,000) | $40,000 | — |
| Buying closing costs (3%) | $12,000 | — |
| Mortgage payments (P+I, 5 yrs @ 6.8%/30yr) | ~$157,200 | — |
| Property tax + maintenance (1.1% + 1.0%/yr) | ~$42,400 | — |
| Insurance ($1,500/yr × 5) | $7,500 | — |
| HOA | $0 | — |
| Sell closing costs (6% of ~$472,400) | ~$28,300 | — |
| Equity recovered (net of sell costs & balance) | −$117,600 | — |
| Opportunity cost of $40,000 @ 7%/yr for 5 yrs | — | −$16,100 |
| Cumulative rent ($2,200/mo + 3%/yr inflation) | — | ~$84,500 |
| 5-Year Net Cost | ~$95,700 | ~$68,400 |
| Savings from renting vs. buying | ~$27,300 cheaper to rent | |
| Break-even year (buying starts to win) | ~Year 7 | — |
Fuente: Worked example reproducido del contenido de la calculadora hacecuentas.com, basado en datos de referencia de Freddie Mac PMMS, FRED/Federal Reserve (CSUSHPINSA) y U.S. BLS Consumer Expenditure Survey (2026). Cifras aproximadas; los resultados reales varían según el mercado local.
How it works
What is the rent vs. buy break-even point?
The rent vs. buy break-even point is the year when cumulative homeownership costs equal cumulative renting costs. It accounts for down payment, closing costs, mortgage interest, property taxes, maintenance, and opportunity cost of invested capital. For most markets, break-even occurs between years 6 and 9, meaning renting is typically cheaper within a 5-year window.
How the Calculator Works
This tool runs two parallel 5-year cash-flow models and compares their net cost — what each path actually costs you after accounting for what you get back.
---
Buying Model
Upfront costs
Down payment = home_price × (down_payment_pct / 100)
Buying closing costs = home_price × (buy_closing_cost_pct / 100)
Total upfront cash = down_payment + buying_closing_costsMonthly mortgage payment (principal + interest)
loan_amount = home_price − down_payment
r = (mortgage_rate / 100) / 12 # monthly rate
n = loan_term_years × 12 # total payments
monthly_PI = loan × r × (1+r)^n / ((1+r)^n − 1)Annual ownership costs (years 1–5)
Each year, property tax and maintenance are applied to the current home value, which grows at
appreciation_rate per year:home_value[y] = home_price × (1 + appreciation_rate/100)^y
property_tax[y] = home_value[y−1] × (property_tax_rate / 100)
maintenance[y] = home_value[y−1] × (maintenance_rate / 100)
insurance[y] = home_insurance_annual (held constant)
hoa[y] = hoa_monthly × 12
mortgage_total[y]= monthly_PI × 12What you get back at year 5 (sale proceeds)
sale_price = home_value[5]
sell_costs = sale_price × (sell_closing_cost_pct / 100)
remaining_balance = outstanding principal after 60 payments
equity_net = sale_price − sell_costs − remaining_balance5-Year net cost of buying
total_paid_buying = down_payment + buying_closing_costs
+ Σ(years 1–5)[mortgage_total + property_tax
+ maintenance + insurance + hoa]
buy_net_cost = total_paid_buying − equity_netThis is the true out-of-pocket cost after you "cash out" at year 5.
---
Renting Model
Cumulative rent paid
Rent grows at
rent_inflation % per year:annual_rent[y] = monthly_rent × 12 × (1 + rent_inflation/100)^(y−1)
rent_total_5yr = Σ(years 1–5) annual_rent[y]Opportunity cost of NOT investing the down payment
If you rent, the down payment cash stays invested and compounds:
opportunity_cost = down_payment × ((1 + investment_return/100)^5 − 1)This is a gain to the renter — it reduces their net cost.
5-Year net cost of renting
rent_net_cost = rent_total_5yr − opportunity_cost---
Break-Even Year
The calculator solves the same equations year-by-year (years 1–15) and finds the first year where buy_net_cost[y] < rent_net_cost[y]. If buying never wins within 15 years under the given assumptions, it reports "> 15 years".
---
Worked Example
| Input | Value |
|---|---|
| Home price | $400,000 |
| Down payment | 10% ($40,000) |
| Mortgage rate | 6.8% / 30 yr |
| Property tax | 1.1% / yr |
| Insurance | $1,500 / yr |
| Maintenance | 1.0% / yr |
| Buy closing costs | 3% ($12,000) |
| Sell closing costs | 6% |
| Appreciation | 3.5% / yr |
| Monthly rent | $2,200 |
| Rent inflation | 3% / yr |
| Investment return | 7% / yr |
Result: Buy net cost ≈ $95,700 | Rent net cost ≈ $68,400 → renting is ~$27,300 cheaper over 5 years. Break-even falls around year 7.
---
Limitations
Disclaimer: Los resultados son orientativos y no constituyen asesoramiento financiero individualizado. Antes de tomar decisiones con impacto, consultá con un asesor financiero registrado en la CNV o contador público matriculado.
Frequently asked questions
What does "net cost" mean in this calculator?
Net cost is total cash you spend minus what you get back. For buying, that means all payments and fees minus the equity you receive when you sell at year 5. For renting, it's total rent paid minus the investment gains on your down payment if you had invested it instead.
Why is buying often more expensive over 5 years even if rent is high?
Buying carries two large upfront drags: closing costs on purchase (2–4%) and selling costs (5–7%). Together that's roughly 8–11% of the home price — on a $400K home, up to $44,000 — that you must "earn back" through appreciation and equity before buying breaks even.
What is opportunity cost and why does it favor renting?
If you rent instead of buy, your down payment cash doesn't sit idle — you can invest it. At a 7% annual return, a $40,000 down payment grows by roughly $16,100 over 5 years. That gain offsets rent and makes renting financially competitive even when rent seems expensive.
Should I include PMI in this calculator?
Yes, if your down payment is below 20%. PMI typically costs 0.5–1.5% of the loan balance per year. Add it to your effective annual insurance or maintenance cost. PMI usually cancels once you reach 80% LTV, which for a 30-year loan with 10% down happens around year 9–11.
What selling cost percentage should I use?
Traditional real estate agent commissions run 5–6% of the sale price. Post-2024 NAR settlement changes may lower buyer-agent fees, so 4–5% total is increasingly common. Add title/transfer taxes (0.1–2% depending on state) for a conservative estimate of 5–7% total.
Is 3.5% home appreciation realistic?
The long-run national average (inflation-adjusted) is roughly 1–2% per year per Yale economist Robert Shiller's data. Nominal appreciation has averaged 3–5% in recent decades. However, individual markets vary enormously — coastal metros have seen 6–10% stretches, while some markets have been flat or negative.
How accurate is the 7% investment return assumption?
The S&P 500 has returned roughly 10% nominally and 7% inflation-adjusted over long periods. For a 5-year window, returns are highly variable — the market could return 50% or lose 30%. Using 5–7% is a reasonable moderate assumption; run the calculator at 4% and 10% to see the range.
Does this calculator account for the mortgage interest tax deduction?
No. The standard deduction ($14,600 single / $29,200 married in 2024) means only about 14% of filers itemize. If you do itemize, the deduction improves the buy side — roughly $1,500–$4,000/yr in tax savings in early years of a $360,000 loan at 6.8%.
When does buying clearly win over renting?
Buying tends to win decisively when: (1) you hold 7+ years to recover closing costs, (2) you put 20%+ down to avoid PMI, (3) local appreciation outpaces the national average, or (4) rent-to-price ratios are high (monthly rent > 0.6–0.7% of home price).
What price-to-rent ratio tells me buying is a good deal?
Divide the home price by annual rent. A ratio below 15 generally favors buying; 15–20 is neutral; above 20 tends to favor renting. Example: a $400,000 home with $2,200/month rent = $26,400/yr → ratio of 15.2, which is in neutral territory.
Sources & references
- Federal Reserve Bank of St. Louis — U.S. Home Price Index (CSUSHPINSA) — FRED / Federal Reserve (2026)
- Freddie Mac Primary Mortgage Market Survey — Freddie Mac (2026)
- Consumer Expenditure Survey — Housing — U.S. Bureau of Labor Statistics (2026)
- IRS Publication 936 — Home Mortgage Interest Deduction — Internal Revenue Service (2026)
- Yale / Shiller Home Price Data — Robert J. Shiller, Yale University (2026)
Methodology & trust
Editorial
Calculadora de finanzas revisada por el equipo editorial de Hacé Cuentas, contrastada con Federal Reserve Bank of St. Louis — U.S. Home Price Index (CSUSHPINSA), según nuestra política editorial y metodología.
Updates
Última revisión: June 20, 2026. Los parámetros se verifican periódicamente con las fuentes citadas.
Privacy
Calculations run 100% in your browser. We do not store or transmit your data.
Limitations
Indicative results. For critical decisions, consult a professional.
📌 How to cite this calculator
Rodríguez, M. (2026). Rent vs. Buy Calculator (5-Year Horizon). Hacé Cuentas. https://hacecuentas.com/rent-vs-buy-5-year-calculator
Contenido bajo licencia CC-BY 4.0 — reutilizable citando la fuente con enlace a Hacé Cuentas.