Rent vs. Buy Calculator

Should you rent or buy a home? It’s one of the biggest financial decisions you’ll ever make — and the right answer depends on far more than just comparing your monthly rent to a mortgage payment. Our free Rent vs. Buy Calculator helps you compare the true long-term cost of renting versus buying by factoring in down payment opportunity cost, home appreciation, property taxes, maintenance, closing costs, and investment returns on your savings. Whether you’re debating your first home purchase or evaluating whether to stay in your current rental, this tool gives you a data-driven answer. Simply enter your local numbers — monthly rent, home price, mortgage rate, and time horizon — and the calculator will show you the net cost of each path, your breakeven point, and a year-by-year comparison chart. The calculator also fetches the live 30-year fixed mortgage rate from Freddie Mac so you’re always working with current numbers. Remember: the financially optimal choice depends on your specific market, how long you plan to stay, and your personal priorities.

How the Rent vs. Buy Calculator Works

The calculator runs a month-by-month simulation over your chosen time horizon. For the renting path, it totals your rent payments (growing each year by your rent increase rate) plus renter’s insurance, then subtracts the investment gains you earn by keeping your down payment invested in the market. For the buying path, it totals mortgage payments, property taxes, maintenance costs, and closing costs, then subtracts the home equity you build through mortgage paydown and home appreciation. The breakeven year is the first year the cumulative net cost of buying falls below the cumulative net cost of renting.

Example 1: Suburban market, 10-year horizon

Consider a $400,000 home with 20% down ($80,000) at 6.8% mortgage rate, 1.1% property tax, and $4,800/year maintenance. The alternative: rent for $2,200/month (rising 3%/year) and invest the $80,000 at 7%/year. Over 10 years: Buying net cost ≈ $148,000 vs. Renting net cost ≈ $162,000. Buying wins by roughly $14,000, but the breakeven is around Year 6. Planning to move in under 5 years? Renting would have been cheaper.

Example 2: High-cost city, 5-year horizon

An $850,000 home with 20% down ($170,000) at 6.8%, vs. renting for $3,800/month. Investing $170,000 at 7%/year grows to ≈ $238,000 after 5 years. Result: Buying net cost ≈ $215,000 vs. Renting net cost ≈ $195,000. Renting wins by $20,000. The high price-to-rent ratio and large down payment opportunity cost make renting the better financial choice over a 5-year horizon.

Price-to-Rent Ratio Reference

Price-to-Rent Ratio	General Indication	Example Markets
Below 15	Buying strongly favored	Many Midwest cities
15–20	Could go either way	Mid-tier metros
20–25	Renting often favored	Austin, Denver
Above 25	Renting strongly favored	NYC, San Francisco, LA

Frequently Asked Questions

Is renting always “throwing money away”?

No — this is a common myth. Renting provides flexibility, avoids maintenance costs, and keeps your capital liquid for investing. If you invest the down payment and monthly savings, renting can outperform buying financially in many markets, especially over shorter time horizons.

How long do you need to own a home to break even?

The breakeven point depends heavily on your market, mortgage rate, and rent/price ratio. In most US cities, it takes 4–8 years for buying to become cheaper than renting when you factor in closing costs, maintenance, and opportunity cost of the down payment.

What is a good price-to-rent ratio?

The price-to-rent ratio divides the home price by annual rent. A ratio below 15 generally favors buying; 15–20 can go either way; above 20 often favors renting. In expensive cities like San Francisco or NYC, ratios above 30 are common, strongly favoring renting.

What closing costs should I budget for?

Closing costs typically run 2–5% of the purchase price. They include origination fees, title insurance, appraisal, inspection, and prepaid taxes/insurance. On a $400,000 home, expect $8,000–$20,000 in closing costs on top of the down payment.

Does the mortgage interest deduction change the math?

It can — but less than it used to. The 2017 tax law capped the mortgage interest deduction and nearly doubled the standard deduction, meaning fewer homeowners itemize. If you do itemize, the deduction reduces your effective mortgage cost slightly. Consult a tax professional for your specific situation.

What factors does the calculator not include?

The calculator does not account for the mortgage interest deduction, PMI (private mortgage insurance for down payments below 20%), HOA fees, or selling costs (typically 6% in agent commissions). For the most accurate comparison, add your estimated PMI and HOA to the monthly buying costs, and factor in selling costs if you plan to sell at the end of your horizon.