What is the usual break-even for buying?

In most US markets at current costs it falls between four and seven years, driven mainly by transaction costs and the gap between rent and the full ownership payment.

Does a large down payment shorten the break-even?

Not much. It lowers interest paid but also raises the opportunity cost of the capital tied up. Transaction costs are unaffected by the down payment.

Not financial advice. Mortgage FV Calculator is a software calculator, not a personal-finance product or advisory service. It computes standard financial functions and displays the results for your convenience. Nothing here constitutes, or is intended to constitute, financial, investment, tax, legal, mortgage, credit, or insurance advice. Always consult a qualified professional before making any financial decision.

Buying when you will move in three years

By Knobugsoft Engineering · Knobugsoft LLC · Last reviewed August 14, 2026 · Methodology

Short holding periods are where buying most often loses, and the reason is arithmetic rather than judgement: you pay roughly 10% of the property's value in round-trip transaction costs and have only a few years of appreciation and amortisation to absorb it.

Assumptions used

Purchase price: $390,000
Down payment: $78,000 (20%)
Rate / term: 6.5% fixed, 30 years
Closing costs to buy: 3% of price
Selling costs: 7% of sale price
Comparable rent: $2,300 per month, rising 3% a year
Appreciation assumed: 3% a year

Illustrative figures, rounded. Replace them with your own in the calculators linked below — results will differ.

The round trip

Buying costs about $11,700 in closing costs. Selling three years later at an appreciated $426,000 costs about $29,800 in commissions and fees. That is roughly $41,500 of pure friction against $36,000 of assumed appreciation — the price growth does not even cover the cost of transacting.

Amortisation helps a little: about $22,000 of principal is repaid over three years at 6.5%. The purchase can still come out ahead of renting, but the margin is thin and it depends entirely on the appreciation assumption holding.

What happens if prices stay flat

At 0% appreciation the same three-year hold loses roughly $30,000 relative to renting after transaction costs, even counting equity built. Flat markets are not unusual, and a three-year window offers no time to recover from one.

This asymmetry is the core of the short-horizon case: the upside requires appreciation to cooperate, while the downside is contractual and certain.

When buying short still makes sense

Three situations justify it. A market where owning costs meaningfully less per month than renting the same property, so the monthly saving offsets the friction. A property you would keep and rent out rather than sell, which removes the selling cost from the horizon. Or a purchase with unusually low transaction costs — a private sale, a flat-fee brokerage, or an assumable low-rate loan.

• Owning materially cheaper monthly than the rental equivalent
• You will retain and let the property instead of selling
• Reduced commission or an assumable loan lowers the round trip

How to test your own case

Put your figures through the rent-versus-buy model and look for the break-even year, then compare it with your actual planned move date rather than an optimistic one. If the break-even is later than your horizon, renting is not a failure to invest — it is the cheaper option, and the difference belongs in a diversified account.

Key takeaways

• Round-trip costs near 10% dominate any three-year housing decision.
• At flat prices, a short hold reliably loses to renting.
• Keeping the property as a rental changes the analysis completely.
• Compare the break-even year with your real move date, not a hopeful one.

Run it yourself

Each link opens the calculator pre-filled with this scenario's numbers.

Common questions

What is the usual break-even for buying?: In most US markets at current costs it falls between four and seven years, driven mainly by transaction costs and the gap between rent and the full ownership payment.
Does a large down payment shorten the break-even?: Not much. It lowers interest paid but also raises the opportunity cost of the capital tied up. Transaction costs are unaffected by the down payment.

Other scenarios

Unfamiliar with a term used here? See the mortgage glossary.

About the author

Quantitative finance engineering team, Knobugsoft LLC

Knobugsoft LLC builds financial calculation software. The same amortisation, time-value-of-money and discounted cash-flow engine that powers these guides serves the site's public API and is covered by an automated regression test suite run on every release.

• Amortisation and escrow modelling (principal, interest, taxes, insurance, PMI, HOA)
• Time value of money: future value, present value, NPV and IRR
• Rent-versus-buy and refinance break-even analysis

Every formula used on this site is documented on the methodology page. Spotted something wrong? Tell us — corrections are published with the review date updated.