What is the rent vs buy breakeven year?

The breakeven year is when the buyer's net worth (home equity after sale) first exceeds the renter's net worth (investment portfolio after taxes). It accounts for buying and selling costs, carrying costs, tax savings, and the investment returns the renter earns on the down payment. Most calculators show a single number; this one shows the distribution across 5,000 scenarios.

Is the "5-year rule" accurate?

The 5-year rule is a rough historical average that was more valid when mortgage rates were 3–4%. At 6.75% rates, buying closing costs represent more months of home appreciation to recover, and the opportunity cost of the down payment is larger. In many current market scenarios, the median breakeven is closer to 7–10 years. That said, in markets with fast rent growth or strong appreciation, breakeven can be shorter.

What does it mean when breakeven distribution shows "never"?

In some simulation paths — especially with short holding periods, high appreciation assumptions for stocks, and low home appreciation — the renter's investment portfolio outperforms the buyer's equity throughout the holding period. The "never" bar in the histogram shows what percentage of simulations have this outcome. If never exceeds 30–40%, renting is likely the stronger choice for that scenario.

Why is the breakeven a distribution and not a single number?

Because the key inputs — home appreciation, stock returns, and rent growth — are uncertain. In a world where home prices grow 6%/year, breakeven happens in year 5. If they grow 2%/year while stocks return 10%, breakeven might be year 15 or never. Monte Carlo models this uncertainty explicitly by running thousands of scenarios with realistic variation in each input.

Rent vs Buy Breakeven Calculator

Not a single breakeven year — a distribution of years across 5,000 Monte Carlo scenarios, showing the real uncertainty in when (or whether) buying outperforms renting.

Last updated: April 2026

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What it does

Breakeven distribution histogram

Shows how many of 5,000 simulation paths break even in each year, with P25/P50/P75 markers.

"Never" breakeven tracking

Shows the percentage of paths where buying never outperforms renting within the holding period.

Holding period sensitivity

Change the holding period slider to see how it shifts the breakeven picture.

How to use Rent vs Buy Breakeven Calculator

1
Enter your home price, rent, and mortgage rate
These are the main drivers of how long it takes for buying to pay off vs renting.
2
Set your expected holding period
Use your best estimate of how long you'd stay. The breakeven histogram shows whether your holding period exceeds the typical breakeven.
3
Enable Monte Carlo simulation
With Monte Carlo on, you see the range of breakeven years — some paths break even in year 3, others never do. This is the honest view.
4
Check the Breakeven tab
The histogram shows how many of the 5,000 simulation paths break even in each year. The P50 line is the median breakeven.
5
Adjust holding period to find the crossover
If your plan is 7 years but the P50 breakeven is 9 years, you're in a risk zone. Adjust inputs to see what changes the picture.

When to use this

Deciding whether a 5-year stay justifies buying

Enter your numbers and check if the P50 breakeven is shorter than 5 years. If it's year 8, you're taking significant risk of underperforming renting.

Planning relocation with uncertain timeline

If you might move in 3–7 years, check the percentage of paths that break even within that range. If it's under 40%, renting has a strong case.

The 5-year rule was designed for a 4% rate world — recalibrate for 6.75%

The popular "5-year rule" for buying vs renting emerged from a mortgage rate environment of 3–4%, where the front-loaded interest cost was lower and closing costs were recovered faster. At 6.75% on a $500,000 loan, the buyer pays roughly $33,000 in interest in year 1 alone — nearly 7% of the home's value in one year, before property taxes, insurance, maintenance, or opportunity cost of the down payment. The closing costs (3–5% to buy, 5–6% to sell) add another $40,000–$55,000 to recover. In this environment, a more realistic rule of thumb is closer to 7–10 years — unless local appreciation is strong or rents are rising faster than average. Run your specific numbers; the rule of thumb is not your situation.

Frequently Asked Questions

What is the rent vs buy breakeven year?: The breakeven year is when the buyer's net worth (home equity after sale) first exceeds the renter's net worth (investment portfolio after taxes). It accounts for buying and selling costs, carrying costs, tax savings, and the investment returns the renter earns on the down payment. Most calculators show a single number; this one shows the distribution across 5,000 scenarios.
Is the "5-year rule" accurate?: The 5-year rule is a rough historical average that was more valid when mortgage rates were 3–4%. At 6.75% rates, buying closing costs represent more months of home appreciation to recover, and the opportunity cost of the down payment is larger. In many current market scenarios, the median breakeven is closer to 7–10 years. That said, in markets with fast rent growth or strong appreciation, breakeven can be shorter.
What does it mean when breakeven distribution shows "never"?: In some simulation paths — especially with short holding periods, high appreciation assumptions for stocks, and low home appreciation — the renter's investment portfolio outperforms the buyer's equity throughout the holding period. The "never" bar in the histogram shows what percentage of simulations have this outcome. If never exceeds 30–40%, renting is likely the stronger choice for that scenario.
Why is the breakeven a distribution and not a single number?: Because the key inputs — home appreciation, stock returns, and rent growth — are uncertain. In a world where home prices grow 6%/year, breakeven happens in year 5. If they grow 2%/year while stocks return 10%, breakeven might be year 15 or never. Monte Carlo models this uncertainty explicitly by running thousands of scenarios with realistic variation in each input.

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