How to use the rent vs buy calculator
The example compares buying a $400,000 home with 20% down against renting a similar home for $2,200 a month, over 15 years.
- The purchase. Enter the price, the down payment, the mortgage rate and term. Closing costs are what you pay to buy (lender fees, title, transfer taxes); selling costs are what you pay to sell, mostly agent commissions.
- The running costs of owning. Property tax and maintenance are entered as a percentage of the home’s value, so they rise as the home appreciates. Insurance and HOA fees rise at the same rate.
- Home price growth. Use a long-run figure for your area rather than the last two years. The property appreciation calculator shows how different rates compound.
- The rental. Enter the rent for a comparable home, renters insurance and how fast you expect rent to rise.
- Investment return. What the renter’s savings earn. It applies to the buyer’s savings too, in the years when owning is cheaper than renting.
- Years to compare. How long you expect to stay before selling or moving.
Taxes are ignored by default. Switch on the mortgage interest deduction if you expect to itemize.
How the comparison works
The calculator follows two households that start with the same cash. The buyer spends it on the down payment and closing costs. The renter puts the same amount into an investment portfolio. This is the opportunity cost of buying: money tied up in a house cannot earn a return elsewhere.
Every month it compares the two housing bills. Whoever pays less invests the difference, so neither household spends more than the other.
Cost to rent = Rent + Renters insurance
Monthly saving invested = |Cost to own − Cost to rent|, by whoever pays lessMortgage payment is principal and interest. Property tax and maintenance are percentages of the home's value at the start of each year. Rent and renters insurance rise once a year by the rent increase.
At the end of each year both net worths are measured as if the home were sold:
Renter net worth = Renter's investments
Break-even year = the first year from which buyer net worth stays at or above renter net worthBoth portfolios grow at the same investment return, compounded monthly.
Measuring wealth, not just spending, is what makes the comparison fair. Comparing rent with a mortgage payment alone ignores the equity the buyer builds, the costs of buying and selling, and the return the renter earns on money not spent on a house.
A worked example
Buying the $400,000 home takes $92,000 in cash: the $80,000 down payment plus $12,000 of closing costs. The renter invests that sum instead.
In the first month, owning costs $2,872.62 (a mortgage payment of $2,022.62 plus tax, insurance and maintenance) against $2,215.00 to rent. The renter invests the $657.62 difference.
After one year the renter is ahead: $105,626 against $70,857 for the buyer, who has paid closing costs and would owe selling costs on a sale. As rent rises and the loan shrinks, the gap closes. Buying pulls ahead in year 12.
After 15 years, the home is worth $623,187 and the loan balance is $232,189. After $37,391 of selling costs, the buyer’s net worth is $354,125. The renter’s portfolio is worth $330,985. Buying comes out ahead by $23,140.
Why the length of stay matters most
Buying carries large one-off costs at both ends: closing costs when you buy and selling costs when you sell. In the example that means $12,000 on the way in and $37,391 on the way out after 15 years. Appreciation and principal repayment need years to earn those back.
| Years before selling | Buyer net worth | Renter net worth | Break-even |
|---|---|---|---|
| 7 years | $173,101 | $194,070 | Not within 7 years |
| 15 years | $354,125 | $330,985 | Year 12 |
| 30 years | $1,066,338 | $793,226 | Year 12 |
Over a short stay, renting wins comfortably. Over 30 years, the fixed mortgage payment matters more and more. Rent keeps rising every year, while principal and interest stay the same, so in the later years owning becomes cheaper each month than renting. The buyer invests that surplus too, and it has grown to $153,688 by the end, on top of a fully paid-off home.
What changes the answer
Four inputs drive most of the result. Each row below changes one input and keeps the rest of the example as it is.
| Change from the example | Buying minus renting after 15 years | Break-even |
|---|---|---|
| The example | $23,140 | Year 12 |
| Home prices grow 1% a year | -$92,172 | Not within 15 years |
| Home prices grow 5% a year | $179,102 | Year 4 |
| Investments earn 4% | $98,312 | Year 7 |
| Investments earn 8% | -$73,149 | Not within 15 years |
| Rent of $1,800 | -$114,686 | Not within 15 years |
| Rent of $2,600 | $160,965 | Year 5 |
| Mortgage rate 5.5% | $91,977 | Year 7 |
| Mortgage rate 7.5% | -$47,685 | Not within 15 years |
Price growth works on the whole value of the home, not just your down payment, which is why it moves the result so much. The investment return decides how hard the renter’s savings work. Rent sets the baseline: a quick check is the price-to-rent ratio, the price divided by a year’s rent. The example’s is 15.2; the higher the ratio, the harder it is for buying to win. The mortgage rate changes how much of each payment is lost to interest.
Treat the result as a range, not a point. Running a pessimistic and an optimistic case for appreciation and returns tells you more than any single answer.
The mortgage interest deduction
In the US, mortgage interest and property tax are deductible only if you itemize, and itemizing helps only when your total deductions exceed the standard deduction. For 2026, that is $32,200 for married couples filing jointly and $16,100 for single filers. Most households take the standard deduction, which is why the calculator leaves taxes out unless you ask.
When you switch the deduction on, the calculator counts only the extra tax saved by itemizing: your marginal rate times the amount by which interest, property tax and other itemized deductions exceed the standard deduction. A married couple in the example gets nothing, because $20,695 of first-year interest plus property tax stays below their standard deduction. A single filer with the same home saves $25,651 over 15 years, which brings the break-even forward to year 8.
What this calculator does not include
- Capital gains tax. US homeowners can usually exclude up to $250,000 of gain ($500,000 for married couples) on a main home, while the renter’s investment gains may be taxed. That favors buying and is not modeled.
- Taxes on investment returns. The portfolios grow untaxed, as in a retirement account.
- The cap on state and local tax deductions, which can limit how much property tax you deduct.
- PMI. With less than 20% down, lenders usually charge mortgage insurance; the mortgage calculator estimates it.
- Uneven costs. Major repairs come in lumps, and rents and prices do not rise smoothly.
- Refinancing and moving costs.
- Non-financial factors: stability, control over the home, flexibility to move.
Use the result to see which assumptions your decision depends on, and test the ones you are least sure of.