Rent vs Buy Calculator
Buy only if you will stay in the home past the break-even year. That year depends on your mortgage rate, your rent, how fast the home gains value and what your invested cash earns. The defaults are a $400,000 home, $2,200 monthly rent and a 7.32% mortgage rate. With those inputs, the modeled break-even is year 21, and a 5% rate moves it to year 5. The rent vs buy calculator below compares your net worth if you buy with your net worth if you rent and invest the same cash. It also shows the year buying pulls ahead.
In our internal modeling, we took a buyer who puts 20% down on the default $400,000 home and pays 3% in closing costs. That is $92,000 of cash on day one and a $320,000 loan. At 7.32% over 30 years, the principal and interest payment is $2,198.18 a month. Adding property tax, insurance and maintenance brings the first-month cost of owning to $3,032. A similar rental costs $2,215 a month with renter's insurance. The renter invests the $92,000 and the $817 monthly difference at a 6% return. Seven years in, buying leaves $169,338 and renting and investing leaves $210,495, so renting leads by $41,156.
How it works
The calculator tracks two paths, buying and renting, month by month. Buying costs the down payment and closing costs on day one. Each month after that, the buyer pays the mortgage payment plus property tax, insurance and maintenance, each figured as a percent of the home's current value. HOA dues are added, and so is mortgage insurance at 0.5% of the original loan a year. Mortgage insurance applies only while the down payment is under 20% and the loan is above 80% of the price. Renting costs the rent, which grows each year, plus renter's insurance. The renter keeps the down payment and closing costs and invests them on day one. Each month, whichever path costs less invests the difference. At every year-end, buying net worth is the home value after selling costs, minus the loan balance, plus the buyer's own investments. Renting net worth is the renter's investments. The break-even year is the first year-end at which buying net worth is at least renting net worth. In our internal modeling, we compared buying with renting and investing the same cash over 1 to 30 years. We then changed one assumption at a time to see which ones move the break-even year. We wrote the model twice, once in Python and once in the calculator's TypeScript code, and the two versions agreed on every scenario below. You can enter the same numbers in the calculator above to check them.
At the defaults, owning costs more than renting in the first month. The price-to-rent ratio, which is the price divided by 12 months of rent, is 15.2. Buying trails renting by $39,311 after 3 years. After 5 years, the gap is $40,669. After 7 years, it reaches $41,156. The gap then starts to close and is $39,815 after 10 years. After 15 years, buying is worth $346,033 and renting is worth $375,959. Renting is still ahead by $29,926 at that point. Buying first catches up in year 21, which is the break-even year at the defaults.
Changing one input at a time shows which assumptions move the break-even year. At a 6% rate, the payment falls to $1,918.56 and the break-even comes in year 8. Renting is still ahead by $5,977 after 7 years. At 5%, the payment is $1,717.83 and the break-even is year 5. Buying is then ahead by $20,214 after 7 years. At 4%, the payment is $1,527.73 and the break-even is year 4. Buying leads by $45,917 after 7 years. Higher rent also helps buying. At $2,600 rent, a price-to-rent ratio of 12.8, the break-even is year 7. At $2,800 rent, a ratio of 11.9, it is year 5. Home price growth of 5% a year moves the break-even to year 5. At 1% growth, buying never catches up within 30 years. The investment return works in the other direction, because the renter invests the $817 monthly difference. At a 3% return, the break-even is year 9. At 9%, buying never catches up within 30 years. A smaller down payment pushes the break-even out. With 10% down, or $40,000, the cash to buy drops to $52,000. The principal and interest payment is $2,472.95, mortgage insurance is added on top, and the break-even moves to year 30. You can size your own down payment with our down payment calculator, and see how a monthly investment grows with our compound interest calculator.
These results come from a model. They are not measurements, and they are not a forecast of home prices, rents or returns. The default mortgage rate comes from the Freddie Mac Primary Mortgage Market Survey. It is the 30-year fixed-rate average for the week of October 22, 2026. That average was 7.32%, down from 7.40% the week before. The other defaults are planning assumptions, and you should replace them with local figures. Property tax is set at 1.0%, insurance at 0.5% and maintenance at 1.0% of the home's value a year. Closing costs are 3%, selling costs are 6%, and home prices and rent each grow 3% a year. The investment return is 6%, and renter's insurance is $15 a month. Property tax and insurance vary a lot by state, so enter your own tax rate and insurance quote. For rent, use what a similar home rents for near you, and our guide on how much to spend on rent can help you set that budget. The model leaves out the income-tax effects of owning. Mortgage interest and property tax deductions help only filers who itemize, so find your bracket with our tax bracket calculator before you count on them. Moving costs and special assessments are not modeled either. To set a home price you can carry, run our mortgage affordability calculator first.
Based on our internal modeling, buy only if you expect to stay past the break-even year. At the defaults, the break-even is year 21, so a seven-year stay favors renting and investing the difference. A lower mortgage rate, higher rent or faster home price growth moves the break-even earlier. The result swings back toward renting if home prices stall or your invested cash earns more than assumed. If you expect to move within a few years, the defaults favor renting for any stay shorter than the break-even year, so keep renting and invest the cash. If you want to buy for space, stability or control of the property, the model does not price those reasons. This calculator is informational and is not financial advice. Enter your own price, rent and local tax rate in the rent vs buy calculator above, then read our renting vs buying guide for more on the decision.
Frequently asked questions
Is it better to rent or buy a house?
It is better to buy only if you stay past the break-even year. At this calculator's defaults, that is year 21. For a 7-year stay, renting and investing comes out ahead by $41,156. Enter your own numbers above to find your break-even year.
How long do you have to stay in a home for buying to beat renting?
You need to stay past the break-even year, which this calculator finds for your inputs. At the defaults, it is year 21. A 5% mortgage rate or $2,800 rent moves it to year 5. At 1% home price growth, buying never catches up within 30 years.
How does opportunity cost change the rent vs buy decision?
Opportunity cost is the return your down payment and extra monthly costs would earn if you invested them instead. For the renter, the calculator invests the $92,000 of day-one cash and the $817 monthly difference at a 6% return. At a 3% return, the break-even moves to year 9. At 9%, buying never catches up within 30 years.
What costs does a rent vs buy calculator include?
This one counts the down payment and closing costs on day one, then the mortgage payment, property tax, insurance, maintenance, HOA dues and mortgage insurance. On the renting side, it counts rent, which grows each year, plus renter's insurance. It subtracts selling costs from the home's value when it figures buying net worth. It does not include moving costs, special assessments or income-tax effects.
How much does the mortgage rate change the break-even year?
At the default 7.32% rate, the break-even is year 21. At 6%, it moves to year 8. At 5%, it is year 5. At 4%, it is year 4.
Does a bigger down payment make buying better?
At the 7.32% default rate, which is above the 6% investment return, a bigger down payment helps buying. With 10% down, or $40,000, the cash to buy is $52,000. The principal and interest payment is $2,472.95, and mortgage insurance is added on top of that. The break-even moves to year 30, compared with year 21 at 20% down.
What is a price-to-rent ratio?
A price-to-rent ratio is the home price divided by 12 months of rent. At the defaults, it is 15.2. This calculator does not use a ratio cutoff to pick a winner. It runs the full model of costs, home equity and invested cash instead.
Does this calculator include the mortgage interest tax deduction?
No, the mortgage interest tax deduction is not modeled. That deduction, like the property tax deduction, helps only filers who itemize. You can find your bracket with our tax bracket calculator.
Sources
We prioritize primary sources for rules, formulas, rates, limits, and definitions. See our calculator methodology and editorial policy.