Calculation & Conversion / Calculators
Rent vs Buy Calculator
This calculator compares what the same household pays to rent and to own the same home over the years you actually plan to stay, and it compares the two on net worth rather than on monthly payment. Both paths start from the same cash: the buyer puts the down payment and the buying costs into a house, the renter invests that same amount instead, and every month whichever path costs less has the difference invested at the return you enter. Owning carries the mortgage payment, property tax, insurance, maintenance, mortgage insurance and HOA dues, less whatever the home is worth when you sell after repaying the loan and paying the selling costs. Renting carries the rent, which rises each year by the rate you choose. The output is a break-even year, the total cost of each path, and a verdict, followed by three sensitivity tables: what happens at different holding periods, what happens at different rent growth rates, and what happens when a single assumption is changed. Every figure is computed month by month in whole cents, so the monthly payments always equal the principal repaid plus the interest charged, exactly.
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The home and the loan
The national median existing-home price is $429,100.
Below 20% the lender adds mortgage insurance. The model adds it automatically while it applies.
Freddie Mac averaged 6.76% on the 30-year fixed and 6.09% on the 15-year for the week of September 10, 2026.
A shorter term costs more each month and less over the years.
This is the single most powerful input on the page. Everything below is the answer for this one number.
Appraisal, origination, title and recording: typically 2–5%.
Commission of 2.5–6% plus title and transfer taxes: 6–10% in total.
What owning costs every year
Nationally the effective rate is 0.86% (the advertised average is 1.10%). It ranges from 0.27% in Hawaii to 2.23% in New Jersey.
About $2,490 a year for $400,000 of coverage (range $2,395–$2,868).
The common rule is at least 1.0% a year. Roofs, furnaces and water heaters do not wait for a convenient month.
Enter 0 if there is none. About 30% of the housing stock has one, at a median of $291 a month.
The alternative, and what you assume about the future
Compare like with like: the same number of bedrooms, the same neighborhood. The national median apartment rent is $1,390; the median asking rent for a single-family home is $1,695.
Rents fell 0.8% year over year in August 2026, but over decades they have run near 3.0%.
Case-Shiller was up 2.1% to June 2026 and the FHFA index up 2.3%. Long-run national growth has been nearer 3.5%.
Whatever is cheaper each month is invested at this rate, and so is the down payment the renter never spends. Set it to 0 to compare raw costs only.
If you stay 7 years
Renting comes out ahead
Renting leaves you $90,667 better off after 7 years — 21.1% of the purchase price, against a $8,582 threshold for calling a difference real.
Buying costs you
$220,700
cash out and back, over 7 years
Renting costs you
$186,990
rent paid, over 7 years
Break-even
Not within 40 years
owning never pulls ahead here
Net worth difference
−$90,667
after investment returns, in the dollars of the year you sell
Price-to-rent ratio
16.6 — In the middle band, where the two are usually a toss-up. Below 15 points to buying, above 20 to renting. It is a crude screen, and it takes no account of your tax bill or how long you stay.
Both ways of counting agree on the direction here: comparing what each path actually costs in cash, and comparing where each one leaves your net worth after investment returns, both point the same way. The cash gap is −$33,710.
Month one, before any of the big numbers move
Every month starts here. The gap is what the two paths are really arguing about.
Owning, all in
$3,117.15
principal, interest, tax, insurance, upkeep
Renting
$2,150.00
rent, and nothing else
Monthly gap
+$967
owning costs more each month
Loan-to-value
80.0%
No mortgage insurance at this down payment
Where 7 years of money goes
Both columns are the same household. Renting spends less every month; owning puts a large amount down at the start to get most of it back at the end.
| Over 7 years | If you buy | If you rent |
|---|---|---|
| Cash at the start$85,820 down payment + $12,873 buying costs | $98,693 | — |
| Monthly mortgage payments$31,575 principal + $155,644 interest | $187,218 | — |
| Property tax | $27,849 | — |
| Home insurance | $20,078 | — |
| Maintenance and repairs | $32,383 | — |
| Paid while you ownEverything above except the cash at the start | $267,529 | — |
| Rent paid | — | $186,990 |
| Back to you when you sell$496,986 sale price − $311,705 mortgage payoff − $39,759 selling costs | −$145,522 | — |
| Total cost over 7 years | $220,700 | $186,990 |
Your net worth, buying versus renting
Each bar is the difference in net worth if you sold in that year — the buyer's equity and investments against the renter's investments. Up means owning is ahead, down means renting is.
How long you would have to stay
The same house and the same loan, sold in different years. You entered 7 years. Buying someone else's closing costs twice is the reason the early years look so bad.
| If you sell after | Owning minus renting | Who is ahead |
|---|---|---|
| 2 years | −$57,376 | Renting |
| 3 years | −$63,086 | Renting |
| 5 years | −$75,877 | Renting |
| 7 years The figure you entered | −$90,667 | Renting |
| 10 years | −$117,107 | Renting |
What would change the answer
Each row changes one assumption and leaves the rest of your inputs alone. 1 of the 4 change which path wins. The familiar advice that you need 5–7 years to cover the cost of buying is not wrong — it is the last row.
Home prices grow at their long-run 3.5%
Case-Shiller has averaged roughly 3.5% a year over the long run. The year to June 2026 came in at 2.1%.
Rent growth runs at the long-run 3%
The national median rent was 0.8% lower year over year in August 2026; over decades rents have run near 3%.
You spend the difference instead of investing it
Most people never invest the gap between rent and owning. Setting the return to zero is the same as comparing raw costs.
Long-run growth, and the difference is not invested
This is the combination the familiar 5-to-7-year rule of thumb is built on. It is a legitimate scenario — just not the only one.
And if rents grow faster than you assumed
Rent growth is the assumption people get wrong most often, because a few tenths of a percent a year compounds into a different house in fifteen years. Break-even is shown at the holding period you entered.
| Rent growth | Break-even | Owning minus renting over 7 years |
|---|---|---|
| -0.8% | Not in 40 years | −$103,366 |
| +1.0% What you entered | Not in 40 years | −$90,667 |
| +3.0% | 25 yr 11 mo | −$75,314 |
| +5.0% | 13 yr 8 mo | −$58,518 |
Before you decide
You pay the transaction costs twice — once going in, once coming out
Buying costs about 3.0% of the price here and selling costs about 8.0%, so roughly 11.0% of the home's value is gone before any equity matters — about $52,632 on this house. Nationally that round trip runs 8% to 15%. It is the single reason a short stay loses money, and it is why a break-even point exists at all. Everything else in this comparison is a monthly argument; this one is paid up front.
On these assumptions buying never gets ahead within 40 years
That is not a prediction that buying is wrong — it means that with the growth rates you entered, the transaction costs and carrying costs never get repaid. Check three things: whether the rent you entered is really for a comparable home, whether your appreciation assumption is a local number (national averages hide a 1.5%–6% spread), and whether the rent growth you entered is one you actually believe for the whole stay.
None of the three growth rates is knowable, and together they decide the answer
Home appreciation (2.1%), rent growth (1.0%) and investment return (5.0%) are three guesses, not data. They compound, so a one-point error in each is worth years on the break-even. In the year to August 2026 the national median rent was 0.8% lower than a year earlier (Apartment List) while home prices were 2.1% higher (Case-Shiller) — rents and prices are not the same trade, and assuming they move together is the most common mistake in this calculation. The "what would change the answer" table below runs each of them at its long-run value so you can see the swing, and the rent-growth table isolates that one variable. Use your own lease history, not a national average.
The verdict assumes you actually invest the difference
This comparison credits the renter with investing $179,231 over 7 years at 5.0%. If that money would sit in a checking account, or get spent, the credit is fictional and buying wins by default. That is not a small caveat — it is the whole reason a renter can come out ahead. The cost table shows the same comparison with investment returns switched off, so you can see how much of the gap is arithmetic and how much is discipline.
1% a year for maintenance is a floor, not a plan
This model charges 1.0% of value a year, following Freddie Mac's 1% guidance. Homes 10 to 30 years old routinely run 1%–2%, and homes past 30 years run 2%–4%. A furnace, a roof and a sewer line inside the same decade is a normal homeownership experience, not bad luck — and a renter never sees that bill. Landlords price it into rent, but they spread it across many units. If your target house is older, raise this number and watch the break-even move.
A house is illiquid, and that has a price the model cannot show
Selling takes months. If a job or a relationship moves you sooner than you planned, you do not get to choose your exit date — and a forced sale inside the break-even window is exactly the case this model warns about. A renter keeps an option that this comparison prices at zero: the ability to leave for the cost of a lease break. If there is a realistic chance you move within a few years, that option is worth more than the number at the top of this page.
Also worth knowing
- The price-to-rent ratio here is 16.6. That is the purchase price divided by a year of rent — a rough, thirty-second sanity check that ignores rates, taxes and your own horizon. Markets below 15 usually favor buying, markets above 20 usually favor renting, and the band in between is a coin flip. It is here as a second opinion, not as a verdict: a high ratio can still be worth buying if you are staying for decades.
- No mortgage insurance at this down payment. At 20% down the loan-to-value ratio is 80%, at or below the 80% line where private mortgage insurance is required. That is worth real money every month, and it is one of the few levers in this comparison you can pull before you buy anything.
- Tax, insurance and maintenance are charged on the home's value as it grows. Property tax, insurance and maintenance all scale with the home value in each month of this model, so they rise along with your appreciation assumption. That is roughly how assessments and rebuilding costs behave, but it does not hold everywhere: California caps assessed value growth at 2% under Proposition 13 and Florida caps homestead assessments at the lesser of 3% or CPI, so buyers there hold an advantage this model does not give them. 18 states plus D.C. apply some form of annual cap, and because a sale usually resets the assessment to market value, a new buyer often pays more than a long-time neighbour for an identical house.
- The tax break is smaller than the ads suggest, and it is not in these numbers. Mortgage interest is deductible only if you itemize, and in 2026 the standard deduction is $32,200 for a married couple and $16,100 for a single filer — a bar most buyers do not clear. The One Big Beautiful Bill Act raised the SALT cap to $40,400 for 2026, phasing down 30% above $505,000 of income with a $10,000 floor, which genuinely helps itemizers in high-tax states. Deductible acquisition debt is capped at $750,000. This comparison deliberately leaves the deduction out — including it would make buying look better by an amount that depends on your bracket, your state and your other deductions. General information, not tax advice.
- These defaults are national, and the national average hides the answer. The defaults use the September 10, 2026 Freddie Mac average 30-year rate of 6.76%, a national median existing-home price of $429,100, and a rent in the same range. Local markets diverge far more than the averages suggest: home-price growth across individual ZIP codes has run from about 1.5% to 6% a year, property tax effective rates run from 0.27% in Hawaii to 2.23% in New Jersey, and rents ranged from a 5.1% decline in San Antonio to a 26% increase in San Francisco over the year to August 2026. Replace every one of these defaults with your own county's numbers before you rely on the output. Everything runs in your browser; nothing is uploaded.
How this is calculated
Both paths start from the same pile of money. The buyer puts $85,820 down and pays $12,873 in closing costs; the renter invests the same amount on day one. Every month, whichever path costs less has the difference invested at your return rate. At the end, the buyer's net worth is the home's value minus the mortgage balance and the selling costs, plus whatever the invested difference has become; the renter's is the investment account alone.
The comparison is therefore on net worth, not on monthly payment. A house that costs less each month than rent can still lose, because the down payment is doing nothing while the renter's is compounding. It also runs the other way: once a mortgage is paid down and the home has appreciated, owning compounds too, and no rent increase ever touches you again.
Everything runs in your browser. Amounts are held to the cent and the mortgage is amortized month by month, so the monthly payments always add up exactly to the principal repaid plus the interest charged.
What this model deliberately leaves out
The mortgage interest deduction, and the question of whether you itemize at all — the standard deduction is $32,200 for a couple filing jointly, and most households never beat it. State and local tax treatment, first-time buyer programs, mortgage insurance that a lender might waive, renters insurance, moving costs, and the value of being free to leave in a year. Property tax is charged on the value you enter; it is not re-assessed, and 18 states cap how fast assessments can rise. Loans above the $832,750 conforming limit price differently.
Where the reference numbers come from
- · Freddie Mac Primary Mortgage Market Survey, week of September 10, 2026: 30-year fixed at 6.76%, 15-year at 6.09%.
- · S&P CoreLogic Case-Shiller national index, June 2026: up 2.1% year over year. FHFA purchase-only index: up 2.3%.
- · National Association of Realtors median existing-home price $429,100; the mean new-house price is $508,800.
- · Apartment List national median rent $1,390, -0.8% year over year in August 2026; Realtor.com median asking rent for a single-family home $1,695.
- · ATTOM: effective property tax 0.86% nationally, from 0.27% in Hawaii to 2.23% in New Jersey.
- · Home insurance about $2,490 a year for $400,000 of coverage, ranging $2,395 to $2,868. Maintenance rules of thumb start at 1.0% of value a year. HOA dues run a median of $291 a month.
- · Closing costs: 2–5% to buy, 6–10% to sell including commission of 2.5–6%. A round trip of 8–15% is the hole the early years are digging out of.
- · Mortgage insurance rates follow Freddie Mac's published 0.3%–1.5% annual range, banded by loan-to-value, and stop once the loan is below 80% of the value.
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How to use
- 1
Set the home and the loan
Enter the purchase price, your down payment percentage, the mortgage rate and the term, and how many years you expect to stay. The holding period is the most powerful input on the page: every result below is the answer for that one number, and nothing else.
- 2
Add what owning costs every year
Property tax, home insurance and maintenance are entered as annual percentages of the home's value, and HOA dues as a monthly amount. Together with the mortgage payment these make up the true monthly cost of owning, and they are the reason a payment that looks cheaper than rent often is not.
- 3
Enter the rent for a comparable home
Use the rent for a home with the same number of bedrooms in the same neighborhood, not the cheapest apartment you could find instead. Then set how fast you expect that rent to rise. The long-run national pace is near 3%, and a few tenths of a percent compounds into a very different number over fifteen years.
- 4
Set the growth assumptions and the return on the difference
Home price growth drives the sale price at the end. The investment return applies to the down payment the renter never spends and to whichever path is cheaper each month. Setting that return to zero compares raw costs, which is the same as assuming the difference gets spent.
- 5
Read the verdict, then read the scenario table
The headline gives the break-even year, the total cost of each path and the difference in net worth. The scenario table then changes one assumption at a time and reports the verdict for each, which is where you find out whether the answer is robust or whether it is resting on a single guess about the future.
Key facts
- The five-to-seven-year rule, and what it actually assumesThe commonly quoted payback period for buying a home emerges from exactly one combination of assumptions: home prices growing at the long-run 3.5% a year, rents growing at the long-run 3% a year, and the monthly difference between owning and renting not being invested. On this page's national defaults - a $429,100 home, 20% down, a 6.76% mortgage, $2,150 rent, a seven-year stay - that combination puts break-even at 5 years and 4 months. Each assumption on its own moves the number a long way. Investing the monthly difference at 5% while rents grow at 3% pushes break-even to 25 years and 11 months. Leaving the difference uninvested while prices grow at today's 2.1% and rents at 1% gives 12 years and 11 months. Using current readings for all three - 2.1% prices, 1% rents, 5% return - means owning never catches up inside the 40 years the model will look. The rule of thumb is not wrong; it is conditional, and the conditions are on the page.Source:This page's model; long-run growth rates from the S&P CoreLogic Case-Shiller national index; current readings as of September 2026
- The round trip is the hole the early years are digging out ofBuying costs 2% to 5% of the price in appraisal, origination, title and recording fees. Selling costs 6% to 10%, including a commission of 2.5% to 6%. That is 8% to 15% of the price to get in and back out again - about $34,000 to $64,000 on a $429,100 house - and none of it builds equity. A home bought and sold two years later has to appreciate by more than the round trip simply to return the purchaser to where they started, which is why almost every short-holding-period comparison ends with renting ahead, and why the answer to 'how long do I have to stay' moves so much when the commission changes.Source:Closing-cost surveys from Bankrate and Freddie Mac, 2026; National Association of Realtors commission data after the 2024 practice changes
- Where rates, prices, rents and taxes stood in September 2026Freddie Mac's Primary Mortgage Market Survey put the 30-year fixed at 6.76% and the 15-year at 6.09% for the week of September 10, 2026. The S&P CoreLogic Case-Shiller national index was up 2.1% year over year to June 2026 and the FHFA purchase-only index up 2.3%. The median existing-home price was $429,100. Apartment List put the national median rent at $1,390, down 0.8% year over year in August 2026, while Realtor.com's median asking rent for a single-family home was $1,695. ATTOM's 2026 analysis put the effective property tax rate at 0.86% nationally, from 0.27% in Hawaii to 2.23% in New Jersey, and roughly 30% of the housing stock carries HOA dues at a median of $291 a month.Source:Freddie Mac PMMS, September 10 2026; S&P CoreLogic Case-Shiller national index, June 2026; FHFA purchase-only HPI; NAR existing-home sales, August 2026; Apartment List National Rent Report, August 2026; Realtor.com rental report; ATTOM 2026 property tax analysis
- Cash cost and net worth give two different answers, and both are rightCounting only the cash that leaves your pocket, owning the default house for seven years costs $220,700 and renting costs $186,990, so owning is $33,710 more expensive. Counting where each path leaves you, the owner ends with $145,522 of net worth against the renter's $236,189, so renting is $90,667 ahead. The gap between those two differences is the return on $179,231 of cumulative contributions - the $98,693 paid at closing plus $80,538 of monthly differences - that the renter invested and the owner did not. Any comparison that reports only one of the two numbers is choosing a side; this page reports both.Source:This page's model, national defaults, seven-year holding period
- Cost of the keywordReal estate sits at the lower end of personal finance advertising, with property-related pages typically earning $8 to $20 per thousand pageviews, below the $15 to $50 that banking, credit and investing terms command. Rent-versus-buy queries are nonetheless among the most commercially valuable in the vertical, because the reader is deciding whether to start a mortgage, and both lenders and property portals bid on them.Source:Published real estate vertical RPM ranges, 2025
How this calculator works
Both paths start from identical cash. The buyer turns the down payment and the buying costs into a house; the renter invests the same amount. Every month, whichever path costs less has its surplus invested at the same assumed return, so the two are compared on net worth rather than on monthly payment. Ownership carries mortgage interest, property tax, insurance, maintenance and the transaction costs of buying and eventually selling; renting carries rent that grows at the rate you set.
The answer is unusually sensitive to three inputs: how long you stay, the growth rate you assume for prices and rents, and the return you assume on the invested difference. Long holding periods favour buying mainly because the round-trip transaction cost is spread across more years — that, rather than any law about housing, is where the familiar five-to-seven-year rule comes from. A cash-cost comparison and a net-worth comparison can legitimately point in opposite directions, and both are reported rather than one being chosen for you.
Sources and standards
Disclaimer
This is an educational calculator, not financial advice. The result is an arithmetic projection of the figures you enter: it does not know your full circumstances, the terms of a specific offer, or the tax and regulatory rules that apply where you live. Confirm any figure against the terms of the product itself, or with a licensed professional, before acting on it.
Last reviewed:
Frequently asked questions
How long do I have to stay before buying pays off?
Longer than the number you have probably heard, unless you also assume that home prices and rents grow the way they did in the 2010s and that you never invest the monthly difference. The familiar five-to-seven-year answer is not a property of the housing market; it is the output of one specific set of assumptions, and the scenario table on this page shows exactly which. On the national defaults here - a $429,100 home, a 20% down payment, a 6.76% mortgage, $2,150 rent and a seven-year stay - break-even arrives at 5 years and 4 months only when home prices grow at their long-run 3.5% a year, rents grow at their long-run 3%, and the $967 a month that owning costs above renting is spent rather than invested. Hold rent growth at 3% but invest that difference at 5% and the break-even moves out to 25 years and 11 months; set the growth rates back to today's readings, 2.1% for prices and 1% for rents, and owning never catches up inside the 40 years the model will look. The reason the early years look so bad is that the round trip costs 8% to 15% of the price - roughly $34,000 to $64,000 on this house - spent before a single dollar of equity accumulates. Stay long enough and the mortgage balance falls while the home appreciates, which is why the real answer is about time rather than about which option is cheaper this month.
Is a 20% down payment required?
No, and the question is really about what that money is doing. A conventional loan can go as low as 3% down through Fannie Mae's HomeReady and Freddie Mac's HomePossible programs, and an FHA loan starts at 3.5%. What a small down payment buys you is private mortgage insurance: the lender charges an annual premium of roughly 0.3% to 1.5% of the loan amount, banded by loan-to-value, and it stays in place until the balance falls below 80% of the home's value, at which point you can ask for it to be cancelled; the Homeowners Protection Act requires automatic termination at 78%. Run the trade-off on this page and both directions are visible. At 3% down on the default house the loan-to-value starts at 97%, mortgage insurance alone costs about $32,000 across seven years, and the seven-year gap between owning and renting widens from $90,667 to $139,260. At 20% down there is no mortgage insurance at all. But a smaller down payment also takes less money out of your portfolio and locks less of it into the house - the model invests whatever you do not put down - so the two effects partly offset, and which way the trade goes depends on what that money would otherwise be earning. The input takes anything from 0% to 60%; try both.
Is renting just throwing money away?
No, and the arithmetic on this page shows why the phrase survives anyway. Rent buys you somewhere to live for a month, and much of a mortgage payment buys nothing you keep either. Over a seven-year stay on the national defaults the owner pays $155,644 of mortgage interest, $27,849 of property tax, $20,078 of home insurance and $32,383 of maintenance - $235,954 that never turns into equity - against $186,990 of rent. The mortgage payment looks cheaper than it is because only $31,575 of the $187,218 paid goes to principal, and the early years are almost entirely interest. Owning's advantage is real but it arrives later and it is a different kind of advantage: a fixed mortgage payment stops growing while rent does not, the loan eventually ends, and the home is worth more when you sell. That is why the verdict here is a function of how long you stay rather than a judgement on the two ways of living. Note also that the two framings answer different questions - over these seven years owning costs $220,700 against $186,990 of rent, while the renter ends with $236,189 of net worth against the owner's $145,522 - and the page reports both rather than picking the flattering one.
Does this include the mortgage interest deduction?
No, deliberately. The deduction is only available to taxpayers who itemize, and the standard deduction for 2026 is $32,200 for a married couple filing jointly, $16,100 for a single filer and $24,150 for a head of household. Itemized deductions also have to clear the state and local tax cap, which is $40,400 in 2026 and phases down above $505,000 of income. For most buyers in the first years of a loan, interest plus property tax does not beat the standard deduction, so the deduction is worth exactly nothing; and where it is worth something, it is a fraction of the interest paid rather than a rebate on it. Folding it in by default would make owning look better by an amount most readers would never receive, and it interacts with a tax situation this page cannot see. If you know you itemize, subtract roughly your marginal rate times the deductible share of the interest from the mortgage rate you enter here.
Why does the calculator say renting wins right now?
Because all three growth rates in the default profile are current readings rather than long-run averages, and each one works against owning. Home prices were up 2.1% year over year on Case-Shiller and 2.3% on the FHFA purchase-only index, against a long-run national average nearer 3.5%. The national median rent was 0.8% lower year over year in August 2026. And the $967 a month that owning costs above renting on this house, together with the $98,693 of cash that goes out at closing, is assumed to earn 5% a year instead. Set those three inputs to their long-run values and the conclusion flips to buying with a break-even at 5 years and 4 months. Neither answer is the truth about your decision, because nobody knows the next decade of prices and rents, and both are legitimate outputs of the same model. What the page can tell you honestly is how much the answer depends on each assumption, which is why the scenario table changes one assumption at a time and reports the verdict for each.
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