How Long Should You Stay in a House to Make Buying Worth It?
The break-even horizon is the single most important number in the rent vs buy decision. Here is how to understand it, what drives it, and how to find yours.
The 5-year rule: is it still valid?
The oft-cited "5-year rule" for buying a home suggests you should plan to stay at least 5 years before buying. It is a reasonable starting point, but it is a heuristic, not a law. In some markets and at some interest rates, the break-even is 3 years. In others, it is 8 or more.
At the interest rate levels of 2022–2024, the break-even point extended significantly compared to the low-rate era of 2020–2021. The 5-year rule was calibrated for a world of 3–4% mortgage rates. At 6.75%, a more conservative starting point might be 7 years.
What drives break-even in your market
Five factors determine your personal break-even horizon:
- Transaction costs: Higher closing costs and agent commissions mean a longer break-even. This is largely fixed regardless of market.
- Interest rate: Higher rates mean higher monthly buying costs, which extend the break-even. A 1% rate increase typically adds 1–2 years to break-even.
- Price-to-rent ratio: In markets where buying is expensive relative to renting, break-even is longer because your monthly buying cost exceeds renting cost by more.
- Rent growth rate: Faster rent growth means renting becomes progressively more expensive over time, which shortens break-even.
- Appreciation rate: Higher appreciation builds equity faster and improves the buying side of the ledger, shortening break-even.
Break-even by scenario
Here are approximate break-even points for a $400,000 home with 20% down in different conditions. These are estimates; use the Break-Even Calculator for your exact numbers.
| Scenario | Rate | Rent growth | Approx. break-even |
|---|---|---|---|
| Low rate, avg rent growth | 3.5% | 3% | 3–4 years |
| Mid rate, avg rent growth | 5.5% | 3% | 5–6 years |
| High rate, avg rent growth | 6.75% | 3% | 7–8 years |
| High rate, high rent growth | 6.75% | 5% | 5–6 years |
| High rate, low rent growth | 6.75% | 1% | 10+ years |
Equity vs cost: two ways to think about it
There are two meaningful ways to define "break-even" and they give different answers:
Cumulative cost break-even: The year when the total money you have spent on buying falls below the total money you would have spent on renting. This ignores equity and focuses purely on cash outflows.
Net worth break-even: The year when your net financial position as a homeowner (equity minus accumulated costs) equals or exceeds the net financial position of a renter who invested the down payment and any monthly savings. This is a more comprehensive comparison.
The net worth break-even often comes sooner than the cost break-even because equity builds throughout the ownership period, even before cumulative costs converge. The Rent vs Buy Calculator shows both.
How to find your specific number
Your personal break-even depends on numbers that are specific to your situation, your local market, your mortgage rate quote, the actual rent for a comparable home, and realistic assumptions about appreciation and rent growth in your area.
The Break-Even Calculator computes this precisely. Enter your home price, down payment, interest rate, local property tax rate, and comparable rent, and it will show you the exact crossover year along with a 30-year cost comparison chart.
Frequently Asked Questions
By Barron Hansen, Founder · Last reviewed
Rent vs buy by state
State-level context for the markets most relevant to this guide.