Rent vs Buy If You Stay 5 Years

Expect to move in about five years? This version of the rent vs buy calculator is set up for a short stay so you can test whether buying still pays.

Quick answer

Whether to rent or buy for five years depends on rent, price, appreciation and costs. In this example — $2,400 rent versus a $450,000 home with 10% down at 6.75% — buying is about $14,433 cheaper over five years before closing and selling costs. Typical agent and closing costs could erase that gap.

$
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$
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%
yrs
yrs
%
%
%
%
Buying saves
$14,433
Net cost of renting
$152,903
Net cost of buying
$138,470
Mortgage payment (P&I)
$2,627
Home equity at end
$141,477
Over 5 years, renting costs about $152,903 in total. Buying costs $138,470 once you count payments, taxes, upkeep and the investment return your down payment could have earned — and subtract the $141,477 of equity you keep. Buying comes out ahead by $14,433. The longer you stay, the more buying tends to win.

Inputs are pre-filled with the example used on this page — change any number to see your own result. Built on our rent vs buy calculator.

Key takeaways

  • Short stays favour renting because the one-off costs of buying and selling are spread over fewer years.
  • This calculator excludes closing and selling costs; subtract your estimate from the buying advantage.
  • Home price growth is the biggest uncertainty: lower appreciation can flip the answer.
Opportunity cost — The return your down payment could have earned if it had been invested instead of put into a home.

What the 5-year result includes

Renting costs $152,903 over five years with 3% yearly increases. Buying counts the $45,000 down payment, $2,626.82 monthly principal and interest, $62,117 of property tax and upkeep, and $15,220 of investment growth the down payment could have earned, minus the $141,477 of equity you would hold if the home rose 3% a year. Net, buying costs $138,470.

The costs not included

The calculator does not include closing costs when you buy, or agent fees and closing costs when you sell. Together these often add up to several percent of the home price. On a $450,000 home, 5% in total would be $22,500 — more than the $14,433 advantage here. That is why buying generally makes more sense the longer you expect to stay.

Test a longer stay

With the same inputs over 10 years, buying comes out about $59,519 ahead before transaction costs, because the one-off costs are spread over more years and equity builds faster later in the loan. Change "years you'll stay" above to find your own break-even point, or use the main rent vs buy calculator.

Worked example

Rent: $2,400 × 12, rising 3% a year, totals $152,903 over 5 years. Buy: $45,000 down + 60 payments of $2,626.82 + $62,117 tax and upkeep + $15,220 opportunity cost − $141,477 equity = $138,470. Difference: $14,433 in favour of buying, before transaction costs.

Methodology and sources

Rent grows yearly at the rate you set. Buying adds the down payment, mortgage principal and interest for the years you stay, property tax and maintenance on the rising home value, and the forgone investment return on the down payment, then subtracts equity (home value minus remaining loan balance). Closing costs, selling costs, PMI, tax deductions and renter's insurance are not included.

Sources: CFPB – Buying a house · Investopedia – Amortization

Frequently asked questions

Is it worth buying a house if I move in 5 years?

Sometimes, but it is often close. Once buying and selling costs are included, renting can win for short stays unless prices rise quickly.

Why doesn't the calculator include selling costs?

To keep inputs simple. Subtract your estimated closing and selling costs from the buying advantage for a fuller picture.

Does PMI apply with 10% down?

On a conventional loan it usually does. It is not included here, which slightly favours buying in this example.

What appreciation rate should I use?

Use a cautious local estimate and test 0% too. Short periods are especially sensitive to price changes.

Results are estimates for educational purposes and are not financial advice.

Written and reviewed by Muhammad Asif, founder of CalcPane · Formulas verified by automated tests · Updated