Housing Comparison
Rent vs Buy Calculator
Compare the true cost of renting vs buying — with equity, tax benefits, and opportunity cost.
Our Recommendation
Calculating…
$0Over 7 years, renting costs less than buying this home.
Assumptions applied
How the Rent vs. Buy Verdict Is Calculated
At $2,000/month rent versus $2,600/month to buy, renting is the better option, saving you $10,237 over your stay, with no breakeven within your stay.the difference is less than 5% — too close to call based on cost alone.
Typical scenario — enter your home price and rent above for your personalized rent vs buy comparison.
Monthly Cost Comparison (Year 1)
| Cost Component | Buying | Renting |
|---|---|---|
| Principal & Interest | $0 | — |
| Property Tax | $0 | — |
| Insurance | $0 | $0 |
| PMI | $0 | — |
| HOA Fees | $0 | — |
| Maintenance | $0 | — |
| Rent | — | $0 |
| Total Monthly | $0 | $0 |
Wealth Comparison at End of Stay
Tax savings reflect only the incremental benefit of itemizing: the portion of mortgage interest (capped at a $750K loan) plus SALT (capped at $40,400/yr for 2026 under OBBBA; the cap phases down toward a $10,000 floor for incomes above $505,000) that exceeds the standard deduction (2026 single filer: $16,100). If your itemized deductions fall below the standard deduction — as they do for most households post-TCJA — buying provides $0 in tax savings. Investment value (if renting) is shown after an estimated federal capital-gains tax on its growth, as if the investments were sold at the end of your stay. Growth is the value minus the money put in (the down payment, closing-cost money and each year's monthly savings), so your own contributions are not taxed. Each year, whichever path costs less invests the monthly difference: the renter while renting is cheaper, the buyer once rising rent overtakes the cost of owning. The buyer's invested savings are taxed the same way. The tax uses long-term capital-gains rates for a single filer whose income sits at the bottom of your marginal bracket; a larger income or gain can reach a higher rate. State tax, the net investment income tax and tax-advantaged accounts are not modeled, and the buyer's profit on the home is assumed to fall within the home-sale exclusion. Consult a tax professional for your situation.
Important Considerations
Disclaimer: This calculator provides estimates for educational and informational purposes only. Results should not be considered financial advice. Your actual results may differ based on individual circumstances and factors not captured by this tool. Consult a qualified professional before making financial decisions.
Enter your housing details above to see the net cost comparison chart.
The Complete Rent vs Buy Decision Framework
Making the right housing decision requires understanding the true costs on both sides. This guide breaks down every factor you need to consider.
The True Cost of Renting
Renting is often dismissed as "throwing money away," but that misses real benefits: no maintenance costs, no property taxes, investment flexibility, and mobility. Direct costs are monthly rent (rising 3-5% annually), renter's insurance ($15-30/month), a refundable security deposit, and application fees.
The True Cost of Buying
Your mortgage payment is just the beginning. Upfront: down payment (3-20%), closing costs (2-5%), inspection, and moving. Ongoing PITI+: principal & interest, property taxes (0.5-2.5%), insurance, PMI (if under 20% down), and maintenance (budget 1-2% of value annually).
Breakeven Analysis
The breakeven point is when the total cost of buying equals renting over the same period. High-appreciation markets break even in 2-4 years; moderate markets 4-6; high-cost/low-appreciation 6-10+. A common rule of thumb among financial advisors is the "5-year rule": plan to stay at least 5 years before buying makes financial sense.
When Renting Makes More Sense
Renting is often optimal for short-term plans (moving within 3-5 years), high-cost markets (price-to-rent ratio above 25-30), career uncertainty with relocation risk, better investment opportunities elsewhere, or when you value flexibility over stability. There's no universal right answer — it depends on your timeline, market, and finances.
Important: Total transaction costs (buying + selling) typically range from 8-13% of the home's value. On a $350,000 home, that's $28,000-$45,500 in costs that appreciation must overcome before you break even.
Frequently Asked Questions
It depends on your specific situation. With 30-year fixed mortgage rates well above their 2020-2021 lows (Freddie Mac's Primary Mortgage Market Survey put the 30-year average at 7.03% on September 24, 2026), monthly buying costs are high compared with recent years. However, if you plan to stay 5+ years, have stable income, and can afford the payments comfortably, buying may still make sense for building long-term equity. Use this calculator with your local numbers to compare the true costs over your expected timeframe.
The 5-year rule suggests you should plan to stay in a home for at least 5 years before buying makes financial sense. This timeframe allows you to recover the substantial transaction costs of buying (2-5%) and selling (5-8%) through equity building and potential appreciation. Moving sooner often means losing money compared to renting, even if your home's value increases.
This is the "opportunity cost" of buying. If you rent and invest the down payment, plus the monthly difference in each year renting costs less, you might build more wealth than through home equity. Rent usually rises while a fixed mortgage payment does not, so on a long stay owning can become the cheaper month; from then on our calculator has the buyer invest the difference instead. It compares both scenarios using your expected investment return rate, and it subtracts an estimated capital-gains tax on that growth, as a taxable account would owe when you sell. Historically, the S&P 500 has averaged 7-10% annually, though past performance doesn't guarantee future returns.
Beyond your down payment (3-20% of home price), you should have funds for closing costs (2-5%), moving expenses ($1,000-5,000), immediate repairs or furnishings, and an emergency fund covering 3-6 months of housing payments. Many lenders require at least 3 months of mortgage payments in reserve.
20% down avoids PMI (Private Mortgage Insurance), which adds 0.5-1% to your annual costs. However, putting down less keeps more money available for investments, emergencies, or other goals. Try both scenarios in the calculator to see the impact on your specific situation. Sometimes a smaller down payment with PMI is strategically better.
Historical averages are 3-4% for both home appreciation and rent increases nationally. However, this varies significantly by location. Research your specific market using resources from Freddie Mac or local real estate data. Consider running the calculator with conservative (2%), moderate (3-4%), and optimistic (5%+) scenarios to see how sensitive your results are to these assumptions.
Higher rates increase monthly payments but may cool home prices and reduce buyer competition. The decision depends on your finances, local market, and timeline. If you can afford the payments and plan to stay long-term, you can always refinance if rates drop. Remember: you can refinance your rate, but you can't renegotiate your purchase price.
How This Calculator Works
This calculator models two parallel cost timelines over your stay and, for each year, asks what each path would have cost if you moved out at the end of that year. Buying counts the down payment, closing costs, mortgage payments, property taxes, insurance, maintenance and the cost of selling, minus the equity you would walk away with and any tax benefit from itemizing mortgage interest. Mortgage payments count only while the loan is outstanding: on a stay longer than the loan term, the years after the last payment carry property tax, insurance, HOA fees and maintenance but no principal or interest (changed 6 October 2026: the payment used to be counted in every year of the stay, which overstated the cost of owning on those stays). Renting counts the rent you pay, minus the growth your down payment and closing-cost money could earn if invested instead, after an estimated capital-gains tax on that growth. Both paths spend the same each year: in a year renting costs less, the renter invests the monthly difference; once rising rent overtakes the cost of owning, the buyer invests it instead. The difference is worked out again every year, from that year's rent and that year's costs of owning, rather than held at the first year's gap. Your own money is counted once on each side: the down payment comes back to the buyer inside equity, and the renter's contributions are not treated as gains. The breakeven year is the first year the buying timeline comes out cheaper, read from the same yearly figures as the chart and table. Because the investment-return assumption materially changes the answer, treat the breakeven year as a scenario, not a prediction.
Related Guides
Related Mortgage & Home Calculators
Official Sources
- HUD — Buying a Home — Federal housing resources including renting vs. buying guidance.
- CFPB — Owning a Home — Consumer Financial Protection Bureau's guide to the home buying process.
- IRS Publication 936 — Home Mortgage Interest Deduction guidelines and limitations.
- Freddie Mac Research — Housing market data and mortgage rate surveys.
- National Association of REALTORS — Median home prices, market statistics, and real estate trends.
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