Is it better to rent or buy a home?
Most rent-vs-buy calculators ignore opportunity cost on the down payment. We don't. The break-even year shifts by 3-7 years once that's included.
How the math works
Each year we compute the net wealth change for both paths and find the year where they cross.
Buying side: mortgage payment split into principal (equity) and interest (cost), plus property tax (~1.1% of home value), maintenance (~1% of home value), insurance, HOA. Closing costs amortize across the holding period. Home value appreciates at the rate you set. Selling year subtracts agent fees (~6%) and remaining principal.
Renting side: rent grows at the rate you set. The down payment + closing costs you didn't spend get invested at the expected return rate. Each year, the difference between rent and total ownership cost also gets invested if positive (or covered from the portfolio if negative).
Why opportunity cost matters here: $100K of down payment at 7% real return becomes $197K in 10 years. Most rent-vs-buy calculators ignore this. Including it pushes break-even out by 3-7 years in most US markets at 2026 rates.
Defaults: 7% investment return, 3% home appreciation, 3% rent growth, 6.5% mortgage rate (2026 reality). Override all four for your local market.
Math runs locally. Inputs never leave your browser. Source on github.
Scenarios we've already crunched
If your situation looks like one of these, the article walks through the math:
- Rent vs buy at 2026 rates: 6.5% mortgage changes everything — with rates above 6%, break-even has stretched from ~5 years to ~9. Concrete numbers on a $400K home.
- The full cost of ownership most calculators miss — property tax + maintenance + insurance + HOA + opportunity cost. Why a $2,100 mortgage is really $3,200/month.
- How much house you can afford (vs how much the bank approves) — 28/36 rule applied honestly, with the cost lines banks ignore baked in.