Rent vs Buy Calculator

Should You Rent or Buy?

This isn't a simple question with a universal answer — it depends on home prices, rent costs, how long you'll stay, investment returns on money not spent on a down payment, tax benefits, and your local market. Our calculator models both scenarios over your chosen timeframe, accounting for costs that most back-of-napkin comparisons miss.

Buying costs include: Down payment opportunity cost (that money could be invested and earning returns), mortgage interest, property taxes (~1.1% of home value nationally), homeowners insurance, maintenance (budget 1–2% of home value annually), PMI (if under 20% down), HOA fees, closing costs (2–5% at purchase), and transaction costs when selling (5–6% of sale price in agent commissions and fees).

Renting costs include: Monthly rent (typically increasing 3–5% annually), renter's insurance ($15–30/month), and the investment returns earned on money you would have otherwise spent on a down payment, closing costs, and ongoing maintenance.

The break-even timeline: In most US markets, buying becomes cheaper than renting after 5–7 years of ownership. Below 5 years, closing costs and transaction fees make buying more expensive. This timeline varies dramatically by market — in high-appreciation areas, buying can win in 3–4 years; in overpriced or stagnant markets, 8–10+ years.

What the Calculator Compares

The calculator computes total cost of each option over your specified period, including all direct costs plus the opportunity cost of tied-up capital.

For buying: Monthly mortgage payment + property taxes + insurance + maintenance + HOA - tax deduction benefit - home equity built - appreciation. The net cost is what you spend minus what you build in equity and appreciation.

For renting: Monthly rent (increasing annually) + renter's insurance + investment returns earned on the money you kept liquid. The net cost is total rent paid minus investment gains on money not tied up in a house.

The calculator outputs which option costs less over the period, the monthly crossover point, and total wealth difference between scenarios. It's common for the result to surprise people in both directions — some renters discover buying would save them significantly, while some aspiring buyers discover renting and investing the difference builds more wealth.

Key Variables That Shift the Decision

Length of stay is the most important variable. The shorter your stay, the more buying costs dominate (closing costs, transaction fees). Stay 3 years? Renting almost always wins. Stay 10+ years? Buying usually wins.

Home appreciation rate dramatically affects the buying scenario. At 3% annual appreciation (national average), a $400,000 home gains $12,000 in year one. At 5% (hot market), it gains $20,000. At 0% (stagnant market), buying is purely a cost with no investment return.

Investment returns on the alternative affect the renting scenario. If you rent and invest your would-be down payment at 8% annually, those returns offset rent costs. The higher the assumed investment return, the better renting looks.

Mortgage rate determines how much of your payment goes to interest vs. principal. At 6.4% (2026 average), roughly 70% of your early payments are interest — money that builds no equity. Lower rates make buying more attractive.

Rent growth rate compounds over time. At 4% annual growth, $2,000/month rent becomes $2,920 after 10 years and $4,320 after 20 years. If rent grows faster than inflation, buying locks in a fixed mortgage payment that becomes relatively cheaper over time.

Tax benefits only help if you itemize deductions. With the standard deduction at $14,600 (single) / $29,200 (married filing jointly) in 2026, many homeowners — especially those with smaller mortgages — don't itemize and receive zero tax benefit from mortgage interest or property tax deductions.

Common Misconceptions

“Renting is throwing money away.” Renting pays for shelter — a real, valuable service. The portion of your mortgage payment going to interest is also “thrown away” (it doesn't build equity). Property taxes, insurance, and maintenance are “thrown away.” Only the principal portion of your mortgage payment builds equity, and in the early years of a 30-year mortgage, that's only 25–30% of your payment.

“Buying always builds wealth.” Home appreciation averages 3–4% nationally — below the stock market's ~10% average return. If your $80,000 down payment earns 8% annually in an index fund ($6,400/year) while your home appreciates 3% ($12,000/year on a $400,000 home), the home wins in nominal terms — but only because of leverage (you're earning appreciation on a $400,000 asset with $80,000 invested). Leverage amplifies both gains and losses.

“My mortgage payment equals my rent, so buying is obviously better.” This ignores property taxes ($350+/month), insurance ($130+/month), maintenance ($350+/month on average), and the opportunity cost of your down payment. The true monthly cost of ownership is typically 40–60% higher than the mortgage payment alone.