Use this free rent vs buy calculator to see whether buying a home or renting and investing the difference leaves you wealthier, and how many years it takes for buying to pay off.
Housing · long-term viewRent vs Buy Calculator
The renter invests the down payment, buying costs and any monthly savings. Also, tax breaks and inflation on insurance are left out.
Our free rent vs buy calculator answers one of the biggest money questions, so you can decide with real numbers instead of guesses. To begin with, enter the home price and the rent for a similar place. Then adjust the mortgage rate, costs and how long you plan to stay. After that, the calculator compares your wealth in each case and shows the year buying starts to pay off.
How the Rent vs Buy Calculator Works
In fact, a simple payment comparison misses most of the story. Instead, the calculator follows your money month by month for both choices, so the result is fair.
Firstly, it adds the mortgage, property tax, insurance, HOA fees and upkeep.
Then the renter invests the down payment and any monthly savings.
Finally, it compares the buyer’s equity after selling with the renter’s investments.
The comparison
Buyer = Home value − selling costs − mortgage owed · Renter = Invested savings with growth
Rent vs Buy Calculator Examples
For example, here are three situations with default costs, so you can see how time changes the answer.
To illustrate, the rent is $2,200 and the buyer puts 20% down at 6.5%.
- Firstly: buyer’s equity $173,101
- Then: renter’s investments $183,422
- Also: break-even 9 years
Similarly, it is the same deal, but the buyer stays five years longer.
- Firstly: buyer’s equity $278,939
- Then: renter’s investments $248,975
- Also: break-even 9 years
In contrast, rent here is $2,500 for a home costing $300,000, with 10% down.
- Firstly: buyer’s net worth $197,623
- Then: renter’s investments $72,087
- Also: break-even 3 years
Rent vs Buy Break-Even by Rent Level
In short, this table uses a $400,000 home with the default costs. As a result, you can see how higher rent makes buying pay off sooner.
| Monthly rent | Yearly rent ÷ price | Buying pays off |
|---|---|---|
| $1,600 | 4.8% | 30+ years |
| $1,800 | 5.4% | 29 years |
| $2,000 | 6.0% | 15 years |
| $2,200 | 6.6% | 9 years |
| $2,400 | 7.2% | 6 years |
| $2,600 | 7.8% | 5 years |
| $2,800 | 8.4% | 4 years |
| $3,000 | 9.0% | 3 years |
| $3,500 | 10.5% | 2 years |
The Hidden Costs of Owning
- Buying and selling: for instance, closing costs and agent fees can total 9% or more of the price.
- Upkeep: similarly, repairs and maintenance often cost 1% to 2% of the home’s value each year.
- Taxes and insurance: also, both usually rise as the home’s value goes up.
Rent vs Buy: When Renting Wins
Renting usually wins if you might move within five years, because buying and selling costs need time to recover. Likewise, renting is better where rents are low compared with prices. On top of that, renting keeps your savings flexible, as long as you actually invest the money you save.
When Buying Comes Out Ahead
Buying tends to win when you stay for many years, since the mortgage balance falls while the home’s value grows. Besides, a fixed-rate mortgage protects you from rent rises. Moreover, once the loan is paid off, your housing cost drops to just taxes, insurance and upkeep. Also, you can compare current mortgage rates using the Freddie Mac weekly survey.
How to Use This Calculator
- To begin with, enter the home price, down payment and mortgage rate.
- Then check the costs of owning, such as property tax and upkeep.
- After that, enter the rent for a similar home and how long you will stay.
- Finally, press Compare to see which choice leaves you wealthier.
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Rent vs Buy Calculator FAQs
Is it better to rent or buy a house in 2026?
Above all, it depends on how long you will stay. With mortgage rates around 6% to 7%, buying often needs seven to ten years to beat renting, although cheaper homes can break even sooner.
What is the break-even point when buying a home?
It is the year when owning leaves you wealthier than renting. Before that point, buying and selling costs usually outweigh the equity you build.
Why does the calculator invest the down payment?
Because a renter could invest that money instead of putting it into a house. Therefore, the lost investment growth is a real cost of buying.
What is the 5% rule for renting vs buying?
It estimates the unrecoverable yearly cost of owning, such as interest, tax and upkeep, at about 5% of the home’s value. So, if your yearly rent is below 5% of the price, renting may be cheaper.
How much does it cost to sell a house?
Generally, selling costs 6% to 10% of the price, including agent fees and closing costs. As a result, a short stay often makes buying expensive.
Should I count mortgage interest tax savings?
Most people now take the standard deduction, so they get no extra tax benefit from mortgage interest. However, high earners who itemize may save more by buying.
Disclaimer: Overall, this calculator gives an estimate for general information only and is not financial advice. Also, home prices, rents and returns can change a lot, so treat the result as a guide and speak to a lender or adviser before buying.