Decision
Should I rent or buy?
Renting is not throwing money away and buying is not automatically an investment. The comparison turns almost entirely on how long you stay, because the costs of buying and selling are front-loaded and only amortise over years. Three calculators settle it for your situation.
How to think about it
The popular framing — rent is dead money, a mortgage builds equity — ignores that early mortgage payments are mostly interest, which is exactly as dead as rent. On a 30-year loan you typically repay only about a third of the principal in the first fifteen years.
The real driver is the time horizon. Buying costs 2–5% of the price to enter and roughly 6–8% to exit through agent and closing fees, so a purchase held two years usually loses to renting no matter what the market does. Held ten years, the arithmetic reverses.
The second driver is what you do with the difference. If renting is cheaper monthly and the gap is invested, renting can win outright. If the gap is simply spent, ownership's forced saving is worth more than the spreadsheet suggests.
Work through these, in this order
- Over my actual time horizon, which comes out ahead?Runs both paths month by month — payment, taxes, insurance, maintenance and selling costs against rent and the opportunity cost of the down payment. Change only the number of years and watch the answer flip; that year is the whole decision.Open the Rent vs. Buy Calculator
- What rent fits my income comfortably?Establishes the honest baseline. Comparing an aspirational purchase against your current below-market rent produces a misleading result in both directions.Open the Rent Affordability Calculator
- What would owning actually cost per month?The comparison must be payment-plus-taxes-plus-insurance against rent, not principal-and-interest against rent. That understates ownership by roughly a fifth.Open the Mortgage Calculator
- What does entering cost me?The entry cost is what the time horizon has to amortise. It is the reason a two-year purchase rarely makes sense.Open the Closing Cost Calculator
What the numbers together tell you
If you are confident of staying past the break-even year the calculator shows, buying usually wins. If you are not confident, renting buys flexibility that has genuine value — and the flexibility is worth most precisely when your life is least predictable.
The result assumes the appreciation, rent growth and investment return you enter. Those assumptions move the answer more than any other input, so it is worth running the comparison twice with pessimistic and optimistic figures and seeing whether the conclusion survives both.
Read more about this
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How to Save for a Down Payment on a House
You don't always need 20% down — but you do need a plan. Here's how much a down payment (and closing costs) really takes, where to keep the money, and how to reach the number faster.
Frequently asked questions
How long do I need to stay for buying to be worth it?
Commonly five to seven years, but it depends entirely on local prices relative to rents, your rate, and transaction costs. The rent-vs-buy calculator gives the break-even year for your figures rather than a rule of thumb.
Is rent really money down the drain?
No more than mortgage interest, property tax, insurance and maintenance are. Rent buys housing and flexibility; those costs buy housing and the option to build equity. Only the principal portion of a payment builds wealth, and early on that portion is small.
Related decisions
Can I afford this house?
Work out what a home actually costs you each month — payment, taxes, insurance, PMI — and whether a lender would approve it. Four calculators, in the order they matter.
Am I saving enough?
Check your savings rate, size your emergency fund on lean spending rather than income, and see whether the total is on track for what you want later.
Should I refinance my mortgage?
The break-even test everyone teaches can approve a refinance that costs you more than doing nothing. Here is the comparison that actually decides it.
Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.