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Rent vs buy calculator
Renting isn't throwing money away, and buying isn't automatically building wealth. The honest answer is a break-even: how many years you have to stay for buying to beat renting, all costs counted.
Buying breaks even around year 4. Stay longer and it's cheaper than renting; leave sooner and renting wins, mostly because the down payment, closing, and ~6% selling costs need time to be outrun by equity.
Net cost, year by year
The all-in cost of each path. They cross at the break-even.
| Year | Buy (net) | Rent (net) | Advantage |
|---|---|---|---|
| 1 | $53,354 | $26,525 | Rent +$26,829 |
| 2 | $72,097 | $53,752 | Rent +$18,344 |
| 3 | $90,199 | $81,698 | Rent +$8,501 |
| 4 | $107,631 | $110,379 | Buy +$2,748 |
| 5 | $124,361 | $139,813 | Buy +$15,451 |
| 6 | $140,357 | $170,015 | Buy +$29,658 |
| 7 | $155,582 | $201,005 | Buy +$45,423 |
What a fair comparison includes
Most rent-vs-buy arguments cheat by leaving something out. A fair one accounts for all of it. On the buying side: the down payment and closing costs up front, the full monthly payment plus taxes, insurance, and maintenance every year, and, crucially, the equity you get back at sale, net of the roughly 6% it costs to sell. On the renting side: the rent you pay, growing over time: offset by the investment return on the money you didn't tie up in a down payment.
Why time horizon decides it
Buying front-loads big, unrecoverable costs: closing on the way in, commissions on the way out. Those only get outrun by appreciation and loan paydown over years. That's why the same house can be a terrible buy at a two-year horizon and an obvious one at ten. The break-even is the single most important output here; if you're not confident you'll stay past it, renting is usually the rational choice, not the sentimental one.
Rent vs buy questions
Is it better to rent or buy?
It depends mostly on how long you'll stay. Buying carries large upfront and selling costs, so it usually loses over short horizons and wins over long ones. The break-even is the number of years after which buying becomes cheaper than renting, all costs counted, so the honest question isn't "rent or buy," it's "how long will I be here."
What is the break-even horizon?
The number of years you must own for the total cost of buying, payments, taxes, maintenance, and transaction costs, net of equity, to fall below the total cost of renting. Below it, renting is cheaper; above it, buying pulls ahead. It commonly lands somewhere between three and eight years depending on prices, rates, and appreciation.
Why does renting include an investment return?
Because a fair comparison invests the money a renter didn't spend on a down payment and closing costs. If that capital earns a market return, it offsets part of the rent. Ignoring it unfairly flatters buying. It's the most common way rent-vs-buy math is rigged toward "always buy."
Every calculator
Thinking of buying to rent it out?
Then the question changes: Faro tells you whether the property pays for itself, from real comps.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.