Rent vs. buy calculator

The honest answer: it depends on four things

This calculator cuts through the cultural defaults — "renting is throwing money away," "buying always wins long term" — and just runs the numbers for a specific home price, rent, and time horizon. It works by modeling two parallel scenarios over the years you specify: one where you buy the house, and one where you rent the equivalent unit and invest the difference in monthly cost plus the down payment. At the end of the horizon, it compares the net position of each household.

Whichever scenario has the lower net cost wins. "Net cost" means total cash spent minus what you'd have if you liquidated today — the buyer's home equity, or the renter's investment portfolio.

The four inputs that swing the answer

1. The price-to-rent ratio

Take the home price, divide by annual rent. A ratio under 15 strongly favors buying. A ratio over 21 strongly favors renting. In between is a coin flip that depends on the other inputs. In 2026, most desirable US metros have price-to-rent ratios between 20 and 30 — rent favors renting in those markets unless you'll own for 10+ years.

2. Time horizon

Buying has huge upfront costs (down payment, closing, moving, immediate repairs). Those costs amortize over the years you live there. Three years is rarely long enough; seven years usually is; ten years almost always is.

If there's any real chance you'll relocate for a job, a relationship, or family within 3–4 years, rent. The transaction costs of selling (5–6% in broker fees plus closing costs) combined with unclear near-term appreciation turn short-term ownership into a money-losing proposition in most cases.

3. Home appreciation rate

Long-run US average: ~3–4% per year nominal, roughly matching inflation. Higher in supply-constrained markets (SF, NYC, LA historically); often lower in slower-growth regions. If the calculator's default appreciation assumption feels high or low for your zip code, change it.

4. Your discipline about investing the difference

This is the invisible swing factor. The rent calculation assumes you actually invest the difference between what you'd pay as a homeowner and what you pay as a renter. If renting costs $2,500/month and the equivalent ownership cost is $3,800/month, the "invest the difference" requires actually moving $1,300 into a brokerage account every month for the full horizon.

In practice, most renters don't invest the difference — they spend it. If that's you, buying wins by default because it's a forced-savings mechanism. Running this calculator with a 3–4% investment return instead of 7% roughly approximates an undisciplined renter.

Costs of ownership that catch first-time buyers

• Closing costs: 2–4% of purchase price, due at close.
• Property tax: state-dependent; national average ~1.1% annually.
• Insurance: $800–$2,500+ per year depending on area and structure.
• Maintenance: 1–2% of home value per year on average (roofs, HVAC, appliances, paint, plumbing).
• HOA fees: $0 for single-family detached, $200–$600/month for condos and planned communities.
• PMI: 0.5–1.5% of loan balance per year if you put down under 20%.
• Utilities: typically 50–100% higher than equivalent rental (bigger space, renter often had utilities bundled).
• Transaction costs on exit: 5–6% broker fees + 1–2% closing costs when you eventually sell.

Costs of renting that buyers often miss

• Rent increases: 3–8% per year in most markets. A $2,200 rent becomes $3,000 in 10 years at 3% growth; $4,000 at 6% growth.
• Moving costs: rent increases that price you out require periodic moves, typically $1,000–$4,000 each.
• Security deposits: tied up cash, usually refundable but not always fully.
• Renter's insurance: modest ($10–$25/month) but real.
• No equity accrual: every month of rent is 100% expense. Every mortgage payment retires some principal.

The calculator models rent growth each year, which heavily affects long-horizon comparisons. A 10-year buy vs. rent at 4% rent growth looks very different than the same comparison at 2% rent growth.

When buying almost always wins

• You'll be in the same location for 7+ years.
• Price-to-rent ratio is under 18 in your market.
• You can put 20% down without draining your emergency fund.
• Your income is stable enough to weather 12+ months of unemployment.
• You're not disciplined about investing the rent savings.

When renting almost always wins

• You might relocate for work or family in under 5 years.
• Price-to-rent ratio is over 22 in your market.
• You'd have to push your budget beyond 28% DTI to afford the house you want.
• You're at the early stage of a career with high upside — mobility matters.
• You genuinely will invest the difference (automatically, every month).

Related tools

• Home affordability calculator — if buying wins, use this to size the right price range.
• Investment return calculator— model what the renter's invested savings would actually be worth.
• Net worth calculator — track the real difference over time, not just the monthly payment comparison.

FAQ

Doesn't a house always go up in value?

On a 30-year horizon, usually. On a 5-year horizon, not always. Nominal appreciation can disappear to transaction costs and maintenance. Real (inflation-adjusted) home price growth nationally has been ~0.5–1% per year historically — much slower than most people believe.

What about the mortgage interest deduction?

Less impactful than it used to be. The 2017 Tax Cuts and Jobs Act raised the standard deduction dramatically; most homeowners now take the standard deduction and get no incremental benefit from mortgage interest. Assume zero tax benefit from ownership unless you're in a very-high-cost metro or have a very large mortgage.

What if I plan to rent out the house later?

That changes the model — you'd become a landlord with a separate cash-flow scenario. This calculator assumes the buyer lives in the house, not rents it out. For a rental analysis, use a real-estate-specific calculator.