Should you keep renting or buy a home? The answer depends on much more than comparing your rent with a mortgage payment. Property taxes, maintenance, closing costs, selling costs, home appreciation and the investment returns you give up on your down payment all play a role. Our free rent vs buy calculator brings all of these costs together so you can see which option is cheaper for your situation and, most importantly, how many years you need to stay in a home before buying pays off.
How to Use the Rent vs Buy Calculator
Enter the details of the home you’re considering and the rent you currently pay (or would pay for a similar home). Then choose how many years you expect to stay. The calculator shows the net cost of buying and renting over that period, your break-even year, and a year-by-year comparison.
Rent vs Buy Calculator
Rent vs Buy Calculator
Compare the true cost of renting and buying, and find your break-even year.
| Year | Net cost to buy | Net cost to rent | Savings from buying |
|---|
Net cost of buying = everything you pay (down payment, closing costs, mortgage, taxes, insurance, maintenance, HOA and PMI) minus what you would get back by selling the home at the end, plus the investment returns you give up on your down payment and closing costs. Net cost of renting = rent plus renters insurance. Results are estimates for educational purposes only and do not include tax benefits.
What Each Field Means
Buying
- Home price: the purchase price of the home.
- Down payment: the percentage of the price you pay upfront.
- Mortgage rate and loan term: the interest rate and length of your loan.
- Property tax: the annual tax as a percentage of the home’s value. The U.S. average is roughly 1%, but it varies a lot by state and county.
- Home insurance: your annual homeowners insurance premium.
- Maintenance: a common rule of thumb is to budget about 1% of the home’s value per year for repairs and upkeep.
- HOA fees: monthly homeowners association fees, if any.
- PMI: private mortgage insurance, charged when you put less than 20% down. The calculator stops charging it once your balance falls below 80% of the purchase price.
- Closing costs and selling costs: the fees you pay to buy (often 2% to 5%) and to sell later (often 6% to 8%, including agent commissions).
- Home appreciation: how much you expect the home’s value to grow each year.
Renting
- Monthly rent, rent increase and renters insurance: what you pay to rent a comparable home and how fast you expect rent to rise.
Comparison
- Investment return on savings: the return you could earn if you invested your down payment and closing costs instead of buying.
- Years you plan to stay: the most important input of all.
How the Calculator Works
The rent vs buy calculator compares the net cost of each option over the same period:
- Net cost of buying = down payment + closing costs + all mortgage payments, property taxes, insurance, maintenance, HOA fees and PMI − the money you get back when you sell (home value minus selling costs minus remaining loan balance) + the investment returns you give up on your down payment and closing costs.
- Net cost of renting = all rent payments + renters insurance.
Whichever number is lower is the cheaper option. The break-even point is the first year in which buying becomes cheaper than renting.
Example: Renting vs Buying a $400,000 Home
Here’s what the rent vs buy calculator shows with its default values:
- Home price: $400,000 with 20% down
- Mortgage rate: 7.25% on a 30-year fixed loan
- Property tax: 1.1%; insurance: $1,800 a year; maintenance: 1%
- Closing costs: 3%; selling costs: 6%; home appreciation: 3% a year
- Rent: $2,200 a month, rising 3% a year
- Investment return: 5% a year
Results:
- Monthly cost to own in year one: about $3,033, compared with $2,200 in rent
- Over 3 years: renting is cheaper by about $33,261
- Over 7 years: renting is still cheaper, by about $16,173
- Break-even point: year 10
In other words, in this example buying only makes financial sense if you plan to stay at least 10 years. If you put just 5% down instead of 20%, PMI and higher interest push the break-even point to year 12.
Your results will look very different with other numbers. In areas where rents are high compared with home prices, buying can pay off in just a few years. In expensive markets with relatively low rents, renting can stay cheaper for a decade or more.
What Affects the Break-Even Point Most
How Long You Stay
This is the biggest factor. Buying and selling a home is expensive: closing costs and selling costs together can easily reach 9% or more of the price. The longer you stay, the more years you have to spread those costs and to build equity.
Mortgage Rates
Higher rates mean more of your early payments go to interest instead of equity. For reference, the average 30-year fixed rate was around 7.4% in mid-October 2026, according to Freddie Mac. A lower rate can move your break-even point several years earlier.
Rent Levels and Rent Growth
The higher your rent and the faster it rises, the sooner buying wins. Try changing the rent increase in the rent vs buy calculator from 3% to 5% to see how much it matters.
Home Appreciation
Appreciation increases the money you get back when you sell. But it’s also the hardest number to predict. It’s safer to test a conservative value, such as 2% to 3%, rather than assuming prices will keep rising quickly.
Your Down Payment
A larger down payment reduces interest and avoids PMI, but it also means more money that could have been invested elsewhere. The calculator accounts for both sides.
The Price-to-Rent Ratio: A Quick Rule of Thumb
Before using a detailed rent vs buy calculator, you can get a quick idea with the price-to-rent ratio. Divide the home price by one year of rent for a similar home:
- Below 15: buying is often more favorable
- 15 to 20: it depends on how long you’ll stay and other costs
- Above 20: renting is often more favorable
In our example, $400,000 ÷ ($2,200 × 12) = 15.2, which falls in the middle range. That’s why the result depends so much on how long you plan to stay.
Non-Financial Factors to Consider
Numbers aren’t everything. Before deciding, think about:
- Stability: owning means no landlord can decide not to renew your lease.
- Flexibility: renting makes it much easier to move for a job or a change in your life.
- Control: owners can renovate, paint and have pets without asking permission.
- Responsibility: owners pay for every repair, from a leaking roof to a broken water heater.
- Forced savings: mortgage payments build equity, which can help people who find it hard to save on their own.
Limitations of This Calculator
No rent vs buy calculator can predict the future perfectly. Keep these points in mind:
- Tax benefits are not included. Some homeowners can deduct mortgage interest and property taxes, but only if they itemize, which many people don’t.
- Returns and appreciation are estimates. Real markets go up and down.
- Opportunity cost is simplified. The calculator counts the investment returns you give up on your down payment and closing costs, but not on monthly differences between renting and owning.
- Major repairs can be uneven. A new roof or HVAC system can cost much more in a single year than the 1% average.
Use the results as a guide, not a guarantee, and try several scenarios.
A Note From José María
I’m José María, and I created Finanzasclave to explain mortgage and home-buying decisions in plain English. I built this rent vs buy calculator because comparing rent with a mortgage payment alone gives a misleading answer: it ignores closing costs, selling costs, maintenance and the money your down payment could earn elsewhere. My suggestion is to run your own numbers with a few different scenarios, especially for how long you’ll stay, before deciding. If the break-even point is longer than you’re sure you’ll stay, renting may be the smarter choice for now.
Frequently Asked Questions
Is it better to rent or buy in 2026?
It depends on your local market and how long you’ll stay. With mortgage rates above 7%, many buyers need to stay longer than in the past for buying to pay off. A rent vs buy calculator with your real numbers is the best way to decide.
How many years do you need to stay for buying to make sense?
Often five to ten years, but it can be shorter or longer depending on prices, rents, rates and appreciation in your area.
Why does the calculator say buying costs more even though I build equity?
Because the equity you build is counted when you sell, but so are closing costs, selling costs, interest, taxes, maintenance and the returns your down payment could have earned. In the early years, these costs usually outweigh the equity.
Does the rent vs buy calculator include the mortgage interest deduction?
No. Many homeowners don’t itemize, so the calculator leaves tax benefits out to avoid overstating the advantage of buying.
What investment return should I use?
Many people use 4% to 7% for a diversified long-term portfolio. A lower number is more conservative and makes buying look relatively better.
Final Thoughts
Deciding whether to rent or buy is one of the biggest financial choices you’ll make, and the monthly payment alone doesn’t tell the whole story. Use the rent vs buy calculator to compare the full cost of both options, test different scenarios and find your break-even year. If you’re confident you’ll stay longer than that, buying can be a smart move. If not, renting while you save and invest can be the better path for now.
This calculator and article are for informational purposes only and do not constitute financial advice. Results are estimates based on the assumptions you enter.