Rent vs buy calculator: when buying beats renting

How the rent vs buy calculator decides

The fair comparison is net worth, not monthly cost. Buying ties up the down payment and closing costs, and the monthly cost of owning is usually higher at first; renting keeps that money invested. The calculator follows both households month by month with the same income: whichever one spends less on housing that month invests the difference, so neither gets a free advantage.

Buyer's net worth = value × (1 − selling costs) − loan balance + buyer's savingswhat the buyer would walk away with after selling

Renter's net worth = down payment and closing costs, invested + each month's savings, investedwhat the renter has instead

Selling costs are counted every year, as if the house were sold then, because equity you cannot reach without selling is not worth its full paper value. That is why buying starts behind: on the example, the buyer begins $12,000 down in closing costs, and selling costs would take another $20,000 at today's price.

Part of the owner's $2,986 is principal, which builds equity, so the higher monthly cost is not all lost; the net-worth comparison accounts for that automatically.

Break-even year under different assumptions

The break-even year depends most on how fast home prices and rents grow, and on what the renter's savings earn. Holding everything else at the example's values, buying overtakes renting in:

Two patterns stand out. Price growth matters more than rent growth: each extra point of appreciation pulls the break-even in by years, because it compounds on the whole house, not just the down payment. And a higher return on the renter's savings pushes it out, because the renter's head start compounds too. A 10-year comparison in money terms, buying minus renting:

How long do you need to stay?

Long enough to pass the break-even year; on the example that is year 11, and the gap widens every year after. Short stays favor renting because the costs of buying and selling are paid up front and at the end, whatever the length of the stay:

What history says about the assumptions

No one knows future prices; the past only shows how much they can vary. FHFA's purchase-only index for the United States rose 4.28% a year on average from January 1991 to August 2026, 3.54% a year over the last 20 years and 2.44% in the latest 12 months; from April 2007 to May 2011 it fell 21.3%.^[3] The BLS index of rent of primary residence rose 2.78% in the year to September 2026 and 4.33% a year on average from December 2017 to December 2025.^[4]

For a sense of scale, the Census Bureau put the 2024 national median gross rent (rent plus utilities) at $1,487 a month and median monthly owner costs with a mortgage at $2,035.^[5] The defaults here (3% growth for both prices and rents, a 5% return) are assumptions for the example, not forecasts; replace them with what you believe for your market.

Costs of buying, owning and selling

• Buying: closing costs typically run 2% to 5% of the purchase price;^[2] the closing cost calculator totals your Loan Estimate.
• Owning: property tax, insurance, maintenance and HOA rise with the home; enter local figures. With less than 20% down, PMI can be cancelled at 80% of the original value and ends automatically at 78%;^[10] the PMI calculator finds the month.
• Selling: commission, transfer tax and fees come off the sale price; the calculator subtracts your percentage from the value each year.

Taxes the calculator leaves out

Income taxes are left out because, for most households, they change the answer less than the assumptions above. Three rules decide it:

• Mortgage interest only helps if you itemize. Home mortgage interest is deductible as an itemized deduction,^[7] but the 2026 standard deduction is $32,200 for a married couple and $16,100 for a single filer.^[8] In the example, first-year interest is about $22,650 and property tax $4,000: $26,650 in all, below the married couple's standard deduction, so the couple gets no extra benefit unless other deductions push them over. A single filer would itemize about $10,550 more than the standard deduction.
• Most home-sale gains are tax-free. You can exclude up to $250,000 of gain, or $500,000 for a married couple filing jointly, if you owned and lived in the home for at least two of the five years before the sale.^[6]
• The renter's investment gains are taxable. Enter an after-tax return in Return on money you invest to account for it.

Worked example

1. Buy a $400,000 home with $80,000 down and $12,000 of closing costs; borrow $320,000 at 7.11% for 30 years: principal and interest $2,152.66 a month.
2. Owning costs $2,985.99 in month one; renting a comparable home costs $2,200.00. The renter invests the $92,000 the buyer spent up front, plus the $785.99 monthly difference, at 5%.
3. Prices and rents grow 3% a year. After 10 years the house is worth $537,567 and the loan is down to $275,306: buying is behind by $5,940 after 5% selling costs.
4. Buying catches up in year 11; after 15 years it is ahead by $35,967, and after 30 years by $405,811.

Change one input at a time to see which assumption your answer depends on; if the break-even year moves a lot, that assumption deserves the most thought. Extra principal payments earn your mortgage rate rather than the investment return; the extra payment calculator shows the interest they save.

Beyond the math

The numbers cannot price flexibility, stability or control. Renting makes it cheap to move for a job and passes repairs to the landlord; owning fixes the principal and interest for the life of a fixed-rate loan and lets you change the home. A break-even year far beyond the time you expect to stay is a strong case for renting; one well inside it is a strong case for buying, if the monthly cost of owning fits your budget, which the home mortgage calculator shows in full.