Entry № 12 · logged Sep 30, 2026
Rent vs Buy Calculator Form RB-12
Comparing your rent to a mortgage payment is the wrong math — the payment is only the appetizer. This slip totals the full cost of owning (taxes, insurance, maintenance, closing, selling) against the full cost of renting over the years you’ll actually stay, then stamps the winner and your break-even year.
Settlement slip, Form RB-12. Left ledger: the house you’d buy. Right ledger: renting instead. Every keystroke re-posts the verdict — who wins at your horizon, and the year the running totals cross.
Form RB-12 · posted figures are estimates, not financial advice
How the slip keeps score
Most rent-vs-buy tools compare running totals — this one does the same, with every assumption on the table. For each year up to 30, it posts two numbers:
- The net cost of buying: down payment + closing costs + everything paid to own (principal, interest, taxes, insurance, maintenance, HOA) + selling costs, minus the equity recovered at sale. Equity is what you get back; everything else is gone.
- The net cost of renting: every rent payment, with nothing recovered.
The advantage is the renter’s total minus the buyer’s total. Positive means buying is cheaper; negative means renting is. Two answers are reported:
- The verdict at your horizon — who’s ahead after the years you’ll actually stay.
- The break-even year — the first year the running totals cross. Buying always starts behind (closing costs are paid on day one and nothing is recovered yet); equity and appreciation chip away at the gap until it flips.
One honest simplification, shared with most tools in the genre: the comparison does not credit the renter with investing the down payment and monthly savings in the stock market. A few academic models do that, and they push break-even several years later. Read the verdict as the direct-housing-costs answer — if your investment returns would beat home appreciation, rent’s real position is a little stronger than this slip shows.
Asked at the counter
Why is comparing rent to a mortgage payment the wrong math?
Because the mortgage payment is only the appetizer. Owning adds property taxes, homeowners insurance, maintenance (budget about 1% of the home’s value a year), HOA dues, closing costs up front, and selling costs at the end — while rent is the whole bill. On a $450,000 home at 6.5%, the payment is $2,275 a month but the true owning cost is about $3,196. Comparing $2,200 of rent to $2,275 of mortgage makes it look like a coin flip; comparing it to $3,196 is the honest trade.
What is the break-even year?
The first year the running total cost of buying drops below the running total cost of renting. Buying starts deep behind because of the down payment and closing costs; over time, the equity you build and any appreciation chip away at the gap. On the default case ($450,000 home, $2,200 rent, typical assumptions), the break-even lands in year 7 — sell before then and renting wins, stay longer and buying pulls ahead.
What is the price-to-rent rule of thumb?
Divide the home price by the annual rent. Below 15, buying usually pencils out; above 20, renting usually wins; 15 to 20 is the gray zone where the details — how long you’ll stay, your down payment, the rate — decide it. A $450,000 home against $2,200 a month rent is a 17.0 ratio: gray zone, so run the full numbers instead of trusting the rule. The price-to-rent rule page works it through with more examples.
How long do I have to stay for buying to be worth it?
With typical numbers, around 5 to 10 years. On the default case here, selling in year 3 leaves you $33,158 behind renting; staying the full 7 years puts buying $5,476 ahead. The transaction costs — about 3% to buy, 8% to sell — are why short stays almost never win. The how-long-to-stay page shows the year-by-year drift.
Is this financial advice?
No. It is unrecovered-cost arithmetic on numbers you type. It doesn’t know your job stability, your market, or what a lender will actually offer — and it doesn’t credit the renter with investing the down payment, which can flatter buying slightly. A lender’s pre-approval and your own judgment have the final word.