The standard advice says buying is better than renting if you're staying long enough. But what counts as "long enough"? For many people — relocating for work, recently married, starting a family — the timeline is 3-5 years. At that horizon, the answer is genuinely uncertain and depends heavily on your specific numbers.
Buying and selling a home comes with substantial transaction costs that renters don't face. When you buy, you pay closing costs of 2-4% of the purchase price. When you sell, you pay real estate agent commissions of 5-6% plus additional closing costs. On a $350,000 home, that's roughly $10,000-14,000 to buy and $21,000-25,000 to sell — about $35,000 in round-trip transaction costs.
Those costs must be offset by equity building (principal payments), home appreciation, and tax benefits before buying beats renting. In the early years of a mortgage, most of your payment goes to interest rather than principal, so equity builds slowly.
The math: On a $280,000 loan at 6.75%, your first year's payments total about $21,800. Of that, only $3,200 goes toward principal — the rest is interest. You need appreciation and several years of principal payments to overcome the transaction costs.
In a typical scenario — 20% down, 6.75% rate, 3.5% annual appreciation, 6% selling costs — the breakeven point where buying starts beating renting is usually 4-5 years. Below that, renting wins. Above that, buying wins and the advantage grows with time.
But "typical" hides a lot of variation. The breakeven shifts dramatically based on three factors: the ratio of your rent to the home price (higher rent relative to price favors buying), the appreciation rate in your specific market, and your down payment size (larger down payments reduce the mortgage and tilt toward buying faster).
At a 3-year horizon, renting wins in most markets. You simply haven't had enough time to build equity and benefit from appreciation to overcome the buying and selling costs. A 3-year buyer on a $350,000 home might end up $15,000-30,000 worse off than a renter, even with 3.5% annual appreciation.
The exception is if appreciation is unusually strong (5%+) or your rent is very high relative to the purchase price. In a market where rents are climbing 5-7% annually and home prices are growing 4-5%, even a 3-year purchase can break even.
Five years is the inflection point for most markets. With normal appreciation and a 20% down payment, buying and renting are often within $5,000-10,000 of each other. Small changes in assumptions — a half-point difference in appreciation, $100 difference in monthly rent, slightly different selling costs — can flip the answer.
This is precisely why running the numbers with your actual inputs matters more at 5 years than at 10 years. At 10 years, buying almost always wins. At 5 years, it's a coin flip that depends entirely on your specifics.
Factors that favor buying on a short timeline:
Factors that favor renting:
Adjust the "years to stay" slider from 1-30 and see exactly when buying starts winning in your situation. The calculator accounts for all transaction costs, taxes, and appreciation.
Find your breakeven →If you're staying 3 years or less, rent. If you're staying 7 years or more, buy (in most markets). If you're in the 4-6 year range, the answer depends entirely on your local market, your rent, and the specific home — and it's worth spending 5 minutes running the actual numbers rather than guessing.