Rent vs Buy Calculator

The rent vs buy decision is one of the most impactful financial choices you will make. While conventional wisdom says buying is always better, the reality depends on your specific circumstances: local housing market conditions, how long you plan to stay, your financial readiness, and what you would do with the money saved by renting. Our calculator models both scenarios with real-world costs to give you a clear answer.

When you rent, your housing costs are predictable and you maintain financial flexibility. When you buy, you build equity over time, but you also take on significant costs including maintenance, property taxes, insurance, and opportunity cost on your down payment. The breakeven point is the year when the total cost of buying (including equity gained) becomes less than the total cost of renting. In many markets, this is 5-7 years, but in expensive cities it can be much longer.

Beyond pure dollars, consider lifestyle factors: homeownership provides stability and the freedom to customize your space, while renting offers mobility and freedom from maintenance responsibilities. Use this calculator to understand the financial side, then weigh the personal factors that matter most to you.

The True Cost of Homeownership

Many first-time buyers focus solely on the mortgage payment, but the true cost of owning a home extends well beyond principal and interest. Maintenance and repairs typically run 1-2% of your home's value per year — on a $400,000 home, that is $4,000 to $8,000 annually for roof repairs, HVAC servicing, plumbing issues, and general upkeep. Property taxes vary widely by location but average around 1.1% nationally, adding roughly $4,400 per year on that same home. Homeowner's insurance costs $1,500 to $3,500 per year depending on your area and coverage level.

If your property has a homeowners association, HOA fees can range from $200 to $500 or more per month, covering shared amenities and exterior maintenance. Closing costs at purchase typically total 2-5% of the home price — $8,000 to $20,000 on a $400,000 home — and you will face additional transaction costs when you sell. Perhaps the most overlooked expense is the opportunity cost of your down payment. An $80,000 down payment invested in a diversified portfolio earning 7% annually would grow to roughly $112,000 over five years. Our calculator factors in all of these costs to give you an accurate side-by-side comparison.

When Renting Makes More Sense

Renting is often the smarter financial move in several common scenarios. Short-term plans are the most clear-cut: if you expect to move within three to five years, the transaction costs of buying and selling (closing costs, agent commissions, and moving expenses) typically outweigh any equity you would build. In high-cost markets like San Francisco, New York, or Boston, price-to-rent ratios are so elevated that renting and investing the difference often produces a better financial outcome over even longer time horizons.

Career flexibility is another important factor. If you are in a field where job changes or relocations are common, the mobility that renting provides can translate directly into higher lifetime earnings. Renting also frees up capital for other investment opportunities — funding a business, maximizing retirement contributions, or building a diversified portfolio. The key is to actually invest the savings rather than spending them, which is where the discipline of a structured investment plan becomes essential.

Building Equity vs. Investing the Difference

One of the central questions in the rent vs buy debate is whether building equity through mortgage payments or investing the cost savings from renting leads to greater wealth. When you make mortgage payments, a portion goes toward principal, gradually increasing your ownership stake. Due to how amortization works, most of your early payments go toward interest — in the first year of a 30-year mortgage at 6.75%, roughly 75% of each payment is interest. Equity builds slowly at first and accelerates over time.

On the other side, if renting costs less than owning, you can invest the monthly savings in a diversified stock portfolio. The S&P 500 has historically returned roughly 7-10% annually before inflation, compared to national home appreciation averaging 3-5%. A useful shortcut is the 5% rule: multiply the home's value by 5% and divide by 12. If your rent is below that number, renting may be the better financial deal. For a $400,000 home, the threshold is about $1,667 per month. This 5% accounts for roughly 1% property tax, 1% maintenance, and 3% cost of capital. Our calculator models both paths year by year so you can see exactly when — or whether — buying pulls ahead.

Key Factors in the 2026 Housing Market

The current housing landscape shapes the rent vs buy equation significantly. Mortgage rates are hovering around 6.5-7.0% for a 30-year fixed loan as of early 2026, with our calculator defaulting to 6.75% as a representative rate. While rates have stabilized compared to the volatility of 2023-2024, they remain well above the historic lows of 2020-2021, which means higher monthly payments and a longer breakeven timeline for buyers.

Median home prices remain elevated in most metro areas, though price growth has moderated to low single digits nationally after the rapid appreciation of recent years. Housing inventory is gradually improving but remains below pre-pandemic norms in many markets, as existing homeowners with sub-4% mortgage rates are reluctant to sell and take on higher rates — the so-called rate lock-in effect. For buyers, this means fewer options and continued competition in popular price brackets. For renters, increasing apartment construction in many cities is helping to stabilize rent growth. Factor these conditions into your decision by adjusting the appreciation and rent growth rates in our calculator to reflect your local market.