Is it better to rent or buy a home? This rent vs. buy calculator compares the full cost of each, including mortgage interest, property tax, maintenance, closing and selling costs, rising rents, home value growth and what your money could earn if you invested it instead. It shows which option leaves you with more wealth and the rent at which the two break even.
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Buying vs. renting over time
Difference in net worth if you sold the home in that year. Above $0 means buying comes out ahead. The dot marks how long you plan to stay.
Where the money goes
Estimates only. Both options start with the same cash and spend the same each month; whoever pays less for housing invests the difference. Taxes on investment gains and home sale profits, and mortgage interest deductions, are not included.
How this rent vs. buy calculator works
Comparing a mortgage payment with rent isn’t a fair test. Part of each mortgage payment builds equity, homeowners pay costs renters don’t, and renters can invest the cash a buyer would spend on a down payment. So the calculator compares net worth instead:
- The buyer and the renter start with the same cash: the down payment plus closing costs. The buyer spends it on the home; the renter invests it.
- Each month, both spend the same total amount. Whoever has the lower housing cost that month invests the difference.
- At the end, the buyer’s net worth is the home’s sale price, minus selling costs and the remaining mortgage, plus any investments. The renter’s net worth is their investment account.
Example: buying a $400,000 home with 20% down at 6.5% costs about $2,781 in the first month, including property tax, insurance and maintenance, compared with $2,214 to rent a similar home for $2,200 plus renters insurance. Over 10 years, the buyer pays $346,031 in housing costs and the renter $304,326. But the buyer ends up with $234,029 in home equity after selling costs, while the renter’s investments grow to $206,747. Buying comes out $27,282 ahead.
How long you stay matters most
Buying has large one-time costs: closing costs when you buy and agent fees and transfer taxes when you sell. It takes years of equity growth to recover them. With the same example:
| How long you stay | Better choice | Ahead by | Break-even rent |
|---|---|---|---|
| 3 years | Rent | $24,672 | $2,820/mo |
| 5 years | Rent | $13,906 | $2,394/mo |
| 10 years | Buy | $27,282 | $2,044/mo |
| 15 years | Buy | $95,393 | $1,902/mo |
In this example buying pulls ahead after about 8 years. The break-even rent is the monthly rent at which both choices leave you equally well off. If you can rent a comparable home for less, renting wins; if rent is higher, buying wins. The shorter your stay, the higher rent has to be before buying makes sense.
What tips the balance between renting and buying
Changing one assumption at a time in the 10-year example shows which inputs matter most:
| Change | Result after 10 years |
|---|---|
| Starting example | Buying ahead by $27,282 |
| Home values grow 4% a year instead of 3% | Buying ahead by $73,169 |
| Home values grow 2% a year | Renting ahead by $14,598 |
| Mortgage rate of 5.5% instead of 6.5% | Buying ahead by $66,186 |
| Investments return 7% instead of 5% | Renting ahead by $11,355 |
| Property tax of 1.8% instead of 0.9% | Renting ahead by $25,891 |
| Rent of $2,500 instead of $2,200 | Buying ahead by $79,743 |
| Rent of $1,900 | Renting ahead by $25,180 |
| 10% down instead of 20% (adds PMI) | Renting ahead by $1,971 |
Home value growth and investment returns are the hardest to predict, and small changes swing the result by tens of thousands of dollars. Try a range of values rather than relying on one estimate, and use conservative numbers for your local market.
The hidden costs of owning a home
- Closing costs: typically 2% to 5% of the purchase price, according to Freddie Mac.
- Maintenance and repairs: a common rule of thumb is to budget about 1% of the home’s value each year. Older homes often need more.
- Property tax and insurance: both tend to rise as your home’s value goes up. See our guide to house insurance costs.
- Selling costs: agent commissions, transfer taxes and other fees when you sell. The calculator assumes 6% by default.
- Opportunity cost: money tied up in a down payment can’t be invested elsewhere. Renters insurance, by contrast, is cheap, averaging about $14 a month nationally.
The renting side only works if you invest
Renting comes out ahead in many scenarios only because the renter invests the down payment and any monthly savings. If that money would end up spent instead, buying usually wins, because mortgage payments act as forced savings. If you plan to rent and invest, learn how to start investing in stocks, or consider REITs for real estate exposure without owning property.
Beyond the numbers
Owning gives you stability, control over your home and protection from rent increases. Renting gives you flexibility to move for a job, lower upfront costs and no surprise repair bills. If you’re leaning toward buying, use our home affordability calculator to set a budget and the mortgage calculator to see the full payment schedule, then get a mortgage pre-approval.
Frequently asked questions
Is it cheaper to rent or buy a house?
It depends mostly on how long you stay, local rents and home prices, and how fast home values grow. Monthly costs are usually higher when you buy, but part of each payment builds equity. In our example of a $400,000 home versus $2,200 rent, renting comes out ahead for stays under about 8 years and buying wins after that.
How many years do you need to stay for buying to be worth it?
Often 5 to 10 years, because closing and selling costs take time to recover. The exact break-even depends on your inputs; this calculator shows the year when buying starts to come out ahead.
What is the break-even rent?
It’s the monthly rent at which renting and buying leave you equally well off for the time you plan to stay. If you can rent a similar home for less, renting is the better financial choice; if rent is higher, buying is.
Does the calculator include taxes?
It includes property tax but not income taxes. Mortgage interest deductions, capital gains taxes on investments and the home sale exclusion vary by situation and are left out, so check with a tax professional if they apply to you.
What investment return should I use?
Use a return you could realistically expect on money you would otherwise put into a home, after fees. A lower, conservative figure is safer; the calculator lets you test several values to see how sensitive the result is.
This calculator provides estimates for educational purposes only and is not financial or tax advice. Sources: buyer closing costs of 2% to 5% (Freddie Mac); NerdWallet: average renters insurance cost for 2026.