Rent vs Buy?

Most rent-vs-buy calculators compare your monthly mortgage to your monthly rent. That's the wrong math. The real question is total cost over time, including property tax, maintenance, PMI, and the opportunity cost of your down payment. Here's the honest version.

Your numbers

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Buying likely wins

Break-even at year 5. If you plan to stay in this home longer than 5 years, buying wins on total cost. Shorter than that, renting comes out ahead.

5-year total
Renting
$119,019
Buying
$113,556
10-year total
Renting
$247,201
Buying
$195,366

Monthly cost of owning

Mortgage P&I
$2,528
Property tax (CA)
$313
Insurance
$208
Maintenance (1% rule)
$417
Total monthly
$3,466
vs renting
$2,500/mo

Looks like buying makes sense. Browse real listings near $500,000 now.

Browse homes near $500,000 in CA

How this calculation actually works

Renting is straightforward: we project your rent over 5 and 10 years, assuming a 3% annual increase (the long-run US average). We also assume you invest your would-be down payment in an index fund earning 7% annually — that opportunity cost is real.

Buyingincludes everything, not just the mortgage. We add property tax (real state rates from the Tax Foundation), homeowners insurance (~0.5% of home value annually), maintenance (1% of home value annually — the standard rule), HOA if applicable, and PMI if your down payment is under 20%. We don't count appreciation as a guaranteed gain because it isn't — markets vary.

Break-even year is when your cumulative cost of buying drops below cumulative cost of renting + lost investment returns. If you plan to stay at least that long, buying wins. If you might leave sooner, renting wins.

This is an estimate, not financial advice. Your actual numbers depend on local taxes, your specific lender, and what the market does. Use it as a directional input, not the final word.

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