Should you rent or buy? Compare total wealth after a fixed holding period — with break-even year.
Buy wealth = sale proceeds (home value − selling cost − mortgage left) + invested monthly surplus. Rent wealth = down payment + invested monthly surplus, compounded at 7.0%/yr.
A free rent vs buy calculator. Compare the wealth outcome of buying a home versus renting an equivalent property over a fixed holding period. Models down payment, mortgage P&I, property tax, maintenance, home appreciation, selling costs, rent growth and the opportunity cost of investing the down payment. Returns the break-even year and the final wealth gap.
Both paths start with the same wealth. The renter invests the down payment up front. Each month, whichever party has the lower monthly outflow invests the surplus at your chosen investment return. At the end of the holding period, the buyer cashes out the home (minus selling costs and any remaining mortgage) and the renter has their investment account. The wealth difference is the answer.
The earliest year at which the buyer's total wealth (sale proceeds + side investments) catches up to the renter's investment account. Before that year, renting+investing leaves you wealthier; after it, buying does. Most US scenarios break even between year 5 and year 9 depending on rates, appreciation and rent growth.
Because the down payment plus closing costs are real money invested in the home, not earning a market return. The renter puts that same money into a portfolio earning 6–8%. The buyer needs years of appreciation and amortization to overtake the renter's head start — that's the break-even.
No. Most US taxpayers no longer itemize under the post-2018 standard deduction, so the mortgage interest deduction provides little or no benefit. Add 0.3–0.5% to your effective appreciation rate if you're confident you'll itemize on a high-rate jumbo loan.
Closing costs and points are typically 2–5% of the loan; bake them in by adding to maintenance % or raising the down payment to reflect cash out at purchase. PMI applies if down payment is below 20% — add 0.5–1% to maintenance to approximate it. HOA fees fold into the maintenance % too.
Long-run US home prices roughly track inflation plus 1% (so ~3–4% nominal). Specific metros vary widely: Sun Belt cities have averaged 5–7% over the past decade, while parts of the Midwest have been closer to 2%. Use Case-Shiller or Zillow Home Value Index for your area.
Same core method (down-payment opportunity cost + monthly surplus invested + sale at exit). The NYT calculator adds more US-specific tax knobs (capital gains exclusion, MID, SALT cap) and a buy-cost-equivalent monthly rent solver. This calculator stays country-agnostic so it works for both US and India.
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