Rent vs buy calculator

How the calculator compares renting and buying

Comparing a rent check with a mortgage payment misses most of the picture. An owner also pays property tax, insurance, repairs and the costs of buying and selling. A renter keeps the down payment and can invest it. So the calculator tracks both households month by month and asks one question: after you move out, who has more money? Here is the math with the starting values, a $400,000 home and a $2,200 rental.

1. 1

   Work out the mortgage payment

   The standard formula is M = L × r ÷ (1 − (1 + r)⁻ⁿ), where L is the loan, r the monthly rate and n the number of payments. With 20% down, L = $320,000, r = 7.24% ÷ 12 = 0.6033% and n = 360, so M = $2,180.79 a month for principal and interest.

2. 2

   Add every cost of owning

   In month one: $1,930.67 of interest, $250.13 of principal, $313.33 of property tax (0.94% a year), $200 of insurance and $333.33 of maintenance (1% a year). That is $3,027 against $2,200 of rent. Tax and upkeep grow with the home's value; insurance, HOA dues and rent grow 3% a year.

3. 3

   Invest what the renter doesn't spend

   On day one the buyer spends $80,000 on the down payment and $12,000 on closing costs. The renter invests that $92,000 instead, plus the $827 a month that renting saves. The money earns 5% a year. In any month when owning costs less than rent, the buyer invests the gap instead.

4. 4

   Sell the house at the end

   After 10 years at 3% growth, the home is worth $537,567. Take off 6% for selling costs ($32,254) and the $276,130 still owed, and the buyer walks away with $229,182. The renter's investments have grown to $251,367.

5. 5

   Find the break-even year

   Renting comes out $22,185 ahead at 10 years. The calculator repeats the sale for every year from 1 to 30. In this example, buying first comes out ahead if you sell in year 14, and the lead grows every year after that.

What tips the balance

Six inputs do most of the work. Try moving each one and watch the break-even year.

• How long you stay. Buying and selling eat about 9% of the price in this example. Short stays rarely earn that back.
• Rent compared with price. The cheaper rent is next to the home's price, the longer buying takes to win.
• Mortgage rate. At 7.24%, most of each early payment is interest, which you never get back.
• Home value growth. Small changes compound. One point more or less a year moves the break-even by years.
• Investment return. The higher the return a renter can earn on the down payment, the stronger renting looks. A return the renter won't actually earn, or won't actually invest, flatters renting.
• Property tax and insurance. They vary a lot by state. Effective property tax runs from under 0.3% of value in Hawaii to 1.88% in New Jersey and Illinois.

Break-even year by rent and price growth

Results from this calculator for a $400,000 home with 20% down at 7.24% for 30 years, 0.94% property tax, $2,400 insurance, 1% maintenance, 3% to buy, 6% to sell, 3% rent growth and a 5% return. "30+" means buying never caught up within 30 years.

What the mortgage rate does

Same example, $2,200 rent and 3% growth, with only the rate changed. Freddie Mac's survey put the average 30-year fixed rate at 7.24% for the week of October 29, 2026.

A smaller down payment cuts the cash you need but adds interest and private mortgage insurance (PMI). With 10% down and PMI at 0.5% of the loan a year, the example breaks even in year 21 instead of year 14. Conventional-loan PMI is dropped automatically once the balance is scheduled to reach 78% of the original value, and the calculator stops charging it at that point.

Quick checks before you run the numbers

Price-to-rent ratio. Divide the price by a year of rent for a similar home. $400,000 ÷ ($2,200 × 12) = 15.2. Lower ratios favor buying; ratios above about 20 usually favor renting for a long time. It's a rough guide, since it ignores rates and taxes.

The 5% rule. Multiply the price by 5% and divide by 12: $400,000 × 5% ÷ 12 = $1,667. If similar rent costs less than that, renting is likely cheaper. The 5% stands for roughly 1% property tax, 1% upkeep and 3% for the cost of your money. With mortgage rates over 7%, that last part is low, so the rule now leans toward buying more than it should.

Taxes this calculator leaves out

The comparison is before income tax, on purpose, because the effects are smaller than most people expect and depend on your situation.

• Mortgage interest deduction. It only helps 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 get little or nothing from it.
• Home sale gain. If you owned and lived in the home for two of the last five years, up to $250,000 of profit ($500,000 for most married couples) is usually tax-free.
• Investment gains. A renter's investments may owe tax on dividends and gains unless they sit in a retirement account. That cuts the renter's side somewhat.

Tips and common mistakes

• Compare the same home. Use the rent for a place like the one you'd buy: same size, same area, same yard. A two-bedroom apartment against a four-bedroom house tells you nothing.
• Be honest about how long you'll stay. Job changes, kids and family move people sooner than planned. Check the result at a few shorter stays too.
• Budget for repairs. Fannie Mae suggests setting aside 1% to 4% of the home's value a year, toward the high end for older homes. A new roof or furnace can cost five figures in a single year.
• Get real quotes. Ask an insurance agent for a quote on the actual address, and look up the property tax the current owner pays. Both can surprise you in coastal and high-tax areas.
• Keep a cushion. Don't put every dollar into the down payment. An emergency fund protects you from selling at a bad time.
• Weigh what money can't measure. Owning gives control and stable payments; renting gives flexibility and no repair bills. Both are fair reasons to choose.

Sources and assumptions

• Mortgage rate: Freddie Mac Primary Mortgage Market Survey, 30-year fixed average of 7.24% and 15-year of 6.60% for the week of October 29, 2026.
• Home price: National Association of Realtors, existing-home sales for September 2026 (released October 13, 2026): median price $417,500, up 1.3% in a year. The calculator starts at a round $400,000.
• Home price growth: FHFA House Price Index, up 2.1% from the second quarter of 2025 to the second quarter of 2026. The 3% default is a middle assumption, not a forecast.
• Rent growth: BLS Consumer Price Index, rent of primary residence (series CUUR0000SEHA): up 2.8% from September 2025 to September 2026, about 4.2% a year over 10 years and 3.5% a year over 20 years. Default 3%.
• Property tax: 0.94% is the U.S. aggregate effective rate on owner-occupied homes, computed from the Census Bureau's American Community Survey 2020–2024 (property taxes paid divided by home value), the same method the Tax Foundation uses for its state table (March 2026). See our property tax calculator for your state.
• Maintenance: Fannie Mae's homeowner guide, How to build your maintenance and repair budget, 1% to 4% of value a year. Default 1%, the low end, for a home in good shape.
• Closing costs to buy: lenders such as Wells Fargo put them at 2% to 5% of the price. Default 3%. Your Loan Estimate from the lender shows the real figure.
• Costs to sell: 6% covers agent commissions (surveys in 2026 put the total near 5.5%, and it is negotiable) plus transfer taxes and seller fees, which vary by state. Estimate.
• Home insurance: national averages for a policy with $300,000 of dwelling coverage ran roughly $2,400 to $2,900 a year in 2026, depending on the survey (for example Insurance.com). Default $2,400. Renter's insurance, usually a small amount, is not counted.
• Taxes: IRS tax year 2026 inflation adjustments (standard deduction) and Topic 701, Sale of your home.
• Model: monthly steps over 30 years. Fixed-rate loan with standard amortization. Property tax and maintenance are a share of the home's current value; insurance and HOA dues rise with the rent growth rate. Investment returns compound monthly. Income taxes, refinancing and moving costs are not included. Rates and prices checked October 29, 2026.

Common questions