How this calculator works
The model runs month by month. The owner pays the mortgage, tax, insurance and maintenance while the home appreciates; the renter pays rising rent. Whoever spends less that month invests the difference, and the renter starts by investing the down payment and closing costs. Owner net worth is home value after selling costs, minus the loan, plus investments.
Worked example
With the example values below: Renting comes out ahead, $17,361 (after 7 years). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Renting | |
| Monthly rent | $2,200 |
| Rent increase / yr | 3% |
| Buying | |
| Home price | $425,000 |
| Down payment | 20% |
| Interest rate | 6.25% |
| Loan term | 30 years |
| Property tax rate | 1.1% |
| Insurance / yr | $1,800 |
| Maintenance / yr (% of value) | 1% |
| Home appreciation / yr | 3.5% |
| Buying closing costs | 3% |
| Selling costs | 6% |
| Assumptions | |
| Investment return / yr | 6% |
| Years you plan to stay | 7 yrs |
What the comparison includes
Renting versus buying isn't just rent versus mortgage payment. Buying adds property tax, insurance, maintenance, closing costs and selling costs, but builds equity and benefits from appreciation. Renting avoids those costs, and the money you'd have spent on a down payment can be invested instead.
This calculator runs both paths month by month and compares your net worth: for the buyer, home value after selling costs minus the remaining loan plus any investments; for the renter, the invested down payment and closing costs plus whatever the renter saves each month.
The factors that tip the decision
- How long you'll stay: buying usually needs about five years or more to recover closing and selling costs.
- Price-to-rent ratio: divide the home price by a year's rent for a similar place. Above about 20, renting often wins; below about 15, buying often does.
- Home price growth versus investment returns: the higher your expected investment return relative to appreciation, the better renting looks.
- Rent increases: fast-rising rents favor buying, since a fixed-rate mortgage payment doesn't rise.
- Maintenance: budget 1% to 2% of the home's value a year.
Costs people forget
Selling a home typically costs 6% to 10% of the price once agent commissions, transfer taxes and repairs are included. Closing costs when buying add 2% to 5%. Together that's a large hurdle for a short stay.
On the renting side, the comparison only works if the renter actually invests the difference. If the money would otherwise be spent, buying acts as forced savings. Renters also need renters insurance, though it's far cheaper than homeowners insurance.
Beyond the numbers
Owning gives stability, control over the space and protection from rent increases. Renting gives flexibility to move for work, less responsibility for repairs and less money tied up in one asset. Use the breakeven year from this calculator alongside those trade-offs. The how much house can I afford calculator and the cost of owning a home calculator fill in the buying side.
Frequently asked questions
Is it better to rent or buy a house?
Buying usually comes out ahead if you stay at least five to seven years, prices and rents keep rising, and the total cost of owning is close to rent. Renting tends to win for shorter stays, in markets with high price-to-rent ratios, or when you'd invest the difference.
What is the 5-year rule for buying a house?
A rule of thumb that you should plan to stay at least five years before buying, so appreciation and equity can cover the 2% to 5% closing costs and 6% to 10% selling costs.
What is the price-to-rent ratio?
The home price divided by a year's rent for a comparable home. A $400,000 home that would rent for $2,000 a month has a ratio of about 16.7. Lower ratios favor buying; ratios above about 20 favor renting.
Is renting throwing money away?
No. Rent buys housing, flexibility and freedom from maintenance. Much of an owner's early payment is interest, tax, insurance and upkeep, which are also not recovered. The comparison depends on all costs, not rent versus the mortgage payment alone.
Does the calculator include tax benefits of owning?
No. Since the standard deduction rose, most homeowners don't itemize, so the mortgage interest deduction doesn't help them. If you do itemize, buying looks somewhat better than the calculator shows.
Grow what this calculator projects.
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Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.