Rent vs Buy Calculator

The short answer

• Buying wins when you stay long enough for the home’s growth and repaid principal to outrun the costs of buying, selling and owning.
• On a $400,000 home with 20% down at 7.25%, against $2,200 a month in rent, renting and investing the difference is $11,888 ahead after 10 years.
• Stay 15 years and buying is $22,463 ahead; it pulls ahead in year 13. After 30 years it is $308,504 ahead.
• The answer swings most with the length of your stay, the rent for a similar home, home price growth and mortgage rates.

How to compare fairly

A fair comparison gives both households the same money and asks who ends up richer. The calculator does it this way:

1. Both start with the cash the buyer needs: the down payment plus closing costs. The buyer spends it on the house; the renter invests it.
2. Each month, both pay their housing costs. Whoever pays less invests the difference at the same return.
3. At the end of each year we ask what each would walk away with: the owner sells (less selling costs and the loan balance) and the renter cashes in (less tax on the gains).

Comparing the mortgage payment with the rent is not enough. The payment includes principal, which is savings, and leaves out maintenance, the cost of buying and selling and what the down payment could have earned.

A worked example

Here are the calculator’s default figures, close to a typical purchase in 2026:

Property tax is 0.89% of the home’s value (the national typical rate from the Census Bureau), insurance $1,800 a year, maintenance 1% of the value a year, home prices and rents both rising 3% a year.

The first month

In month one, owning costs $2,963: principal and interest of $2,183, property tax, insurance and a maintenance allowance. Renting costs $2,215, the rent plus renters insurance. The renter invests the $748 gap.

Not all of the owner’s $2,963 is a cost. In the first year, $3,097 of the mortgage payments repay principal, which comes back when you sell. The other $23,098 is interest. Over time the balance shifts toward principal, and rent rises while the mortgage payment stays the same, so owning gets relatively cheaper each year.

Year by year

Buying starts behind, because closing costs are spent and selling costs would be due on day one. Then it catches up a little each year.

The gap shrinks from $35,498 after one year to $11,888 after ten. Run the calculator for 15 years and buying moves ahead in year 13. The chart in the calculator shows the two lines crossing.

Costs you never get back

A useful way to see the trade-off is to add up the money each household spends that never returns. Over the 10 years in the example:

The owner’s sunk costs total $369,705, against $304,710for the renter. The owner makes up the difference through the home’s rise in value. The renter makes it up through returns on the invested down payment. Whichever gain is bigger, net of costs, decides the winner.

How long you stay

Time is the biggest lever. Buying and selling costs are paid once, so the longer you stay, the thinner they are spread.

If a job move, a growing family or a relationship change could make you sell within a few years, renting is usually the safer bet. Selling early can also mean bringing cash to the closing table if prices dip.

How the rent changes the answer

The rent for a similar home is the other key input. Keep the $400,000 home and 10-year stay, and change only the rent:

Every $200 of monthly rent moves the 10-year result by about $35,000. Use listings for homes of the same size, condition and area as the one you would buy, not your current apartment. To check what rent your income supports, use our rent affordability calculator.

The price-to-rent ratio

The price-to-rent ratio divides the price by a year’s rent for a similar home. In the example it is $400,000 ÷ $26,400 = 15.2. It is a quick screen, not a verdict: low ratios lean toward buying, high ratios toward renting, and the break-even depends on rates and how long you stay.

With rent of $3,000 the ratio is 11.1 and buying wins from year 4. With rent of $1,600 it is 20.8 and renting stays well ahead for 10 years. Big coastal cities often have high ratios; many Midwestern and Southern markets have lower ones.

Home price growth

Because you borrow most of the price, a small change in home price growth has a big effect on your equity. With 20% down, a 3% rise in value is a 15% gain on your down payment, before costs.

What the renter earns

The renter’s side only works if the money is really invested and left alone. The return you assume matters almost as much as home price growth:

A savings account paying around 4% is safe but makes buying look better. A stock index fund has earned more over long periods, but with years of losses along the way. Our compound interest calculator shows how a lump sum grows at different rates. Be honest about your habits: if the monthly savings would be spent rather than invested, the renter’s figure is too high.

Mortgage rates

Freddie Mac’s weekly survey put the average 30-year fixed rate at about 7.3% on October 1, 2026. A lower rate cuts both the payment and the interest that never comes back:

If you buy now and rates later fall, you can refinance, though it costs money; our refinance calculator works out when a new rate pays for itself.

A smaller down payment

A smaller down payment means a bigger loan, more interest and, on a conventional loan, PMI until you reach 22% equity on the original schedule. In the example, keeping everything else the same over 10 years:

• 20% down: first month $2,963, renting ahead by $11,888.
• 10% down: first month $3,386, renting ahead by $45,234.
• 5% down: first month $3,531, renting ahead by $51,951.

Buying with less down is still often sensible, because it gets you into a home years sooner. Our down payment calculator compares 3% to 20% down and shows how long each takes to save.

Maintenance and big repairs

Renters call the landlord; owners pay. A common rule of thumb is to budget about 1% of the home’s value a year, which in the example comes to $45,856 over 10 years. The money rarely arrives evenly: a quiet year can be followed by a new roof, water heater or HVAC system. An older home or one with a big lot can need 2% or more.

Keep an emergency fund for repairs on top of the down payment. Stretching every dollar into the purchase leaves no room for the first surprise.

Buying and selling costs

Freddie Mac puts closing costs at about 2% to 5% of the purchase price: lender fees, appraisal, title insurance, recording fees and prepaid items. Selling costs include agent commissions, transfer taxes and title fees; the calculator assumes 6% of the sale price, and commissions are negotiable.

In the example these add up to $12,000 to buy and $32,254 to sell after 10 years. That is why short stays rarely favor buying. Our closing cost calculator breaks the buying side down line by line.

Taxes for owners and renters

Mortgage interest and property tax are deductible only if you itemize. For 2026 the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly, so many owners, especially couples, get little or nothing extra from these deductions. The calculator leaves them out; if you itemize, buying looks a little better.

Home sale gains are usually tax-free: IRS Publication 523 lets you exclude up to $250,000 of gain ($500,000 married filing jointly) if you owned and lived in the home for two of the last five years. Investment gains are taxed when you sell; most people pay 15% on long-term gains, which the calculator takes off the renter’s balance at the end.

What the numbers leave out

None of these show up in a net-worth chart, but they can be worth more to you than a few thousand dollars either way.

Common mistakes

• Comparing the mortgage payment with the rent and stopping there.
• Forgetting maintenance, closing costs and selling costs.
• Comparing a three-bedroom house with a one-bedroom apartment.
• Assuming home prices will keep rising as fast as they did in the last few years.
• Counting the renter’s investments but not investing in real life.
• Buying at the top of your budget and leaving no cash for repairs. Our home affordability calculator shows a safer price.

Using the calculator well

1. Enter the price of the home you would buy and the rent for a similar one nearby.
2. Set your down payment, a real rate quote and how long you expect to stay.
3. Pick your state for its typical property tax rate, then check the county figure under More options.
4. Try a pessimistic case (1% price growth, 7% returns) and an optimistic one (4% growth, 4% returns). If buying wins in both, it is a strong case.
5. Copy the link to share the exact figures with a partner.

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