The rulebook · Form RB-12
The Rent vs Buy Break-Even Year Form RB-12
Two running totals are racing: the net cost of buying (everything paid, minus the equity you recover at sale) against the rent paid, with nothing recovered. Buying starts deep behind — closing costs are paid on day one — and the first year the totals cross is the break-even. Here is what moves it.
1The crossing, worked once
$450,000 home, 20% down, 6.5%, $2,200 rent, typical assumptions. After 3 years the buyer is $33,158 behind. After 6 years the gap is down to $6,132. In year 7 the lines cross — buying finishes the year $5,476 ahead. Sell before the crossing and renting was the cheaper choice; stay past it and buying was.
2Cheap rent pushes the crossing out
Drop the rent to $1,500 on the same home and the renter’s total grows so slowly that the crossing doesn’t happen until year 16. Rent this cheap relative to the price is the gray-zone extreme — this is the house you rent, happily, for a decade.
3Expensive rent pulls it in
Raise the rent to $3,500 and the renter bleeds so fast that buying crosses in year 3 and is $125,010 ahead by year 7. When rent is this high relative to the price, buying isn’t just better — it’s urgent.
- $450k home, $1,500 rent → break-evenyear 16
- $450k home, $2,200 rent → break-evenyear 7
- $450k home, $3,500 rent → break-evenyear 3
- 10% down instead of 20% → break-evenyear 9
- The honest takeawayThe rent-to-price ratio sets the crossing, not the rate
A smaller down payment pushes break-even from year 7 to year 9 — the bigger loan means slower equity early. Find your own crossing on the full slip.
Common questions Form RB-12
What is the break-even year for renting vs buying?
The first year the running total cost of buying drops below renting. On a $450,000 home against $2,200 rent with typical assumptions it lands in year 7. Cheap rent ($1,500) pushes it to year 16; expensive rent ($3,500) pulls it to year 3.
Does a bigger down payment change break-even?
Yes — dropping from 20% to 10% down on the $450,000 example pushes break-even from year 7 to year 9, because the larger loan builds equity more slowly in the early years.
What if the numbers never cross?
Then renting stays cheaper the whole way. That happens when rent is very cheap relative to the price, or when appreciation and rent growth are set near zero — the equity never catches the renter’s low running total. The calculator scans to 30 years and says so honestly.
Is the break-even year or the horizon verdict more important?
They answer different questions, and the honest tool reports both. Break-even is when the running totals cross; the horizon verdict is who’s ahead at the year you’ll actually stay. Around the crossing year the two can disagree — that’s why this slip stamps both.