Rent vs. Buy Calculator
Is it better to rent or buy?
- Break-evenwhen buying starts to come out ahead
- ! Year 13
- First month: owningmortgage, tax, insurance, HOA, PMI, upkeep
- $3,275
- First month: rentingrent + renters insurance
- $2,215
- Cash up front to buydown payment + closing costs
- $52,000
- Net worth if you buyafter selling in year 10
- $200,119
- Net worth if you rentinvested down payment and savings
- $218,562
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Estimate, not a loan offer. Taxes, deductions and investment taxes aren't included. We may earn a commission when you click. It does not change your estimate. How we calculate · How we make money
| Year | Owning cost | Renting cost | Buy: net worth | Rent: net worth |
|---|---|---|---|---|
| 1 | $39,305 | $26,580 | $31,304 | $67,614 |
| 2 | $39,611 | $27,377 | $47,216 | $83,507 |
| 3 | $39,927 | $28,199 | $63,763 | $99,676 |
| 4 | $40,251 | $29,045 | $80,977 | $116,121 |
| 5 | $40,586 | $29,916 | $98,888 | $132,839 |
| 6 | $40,930 | $30,814 | $117,528 | $149,827 |
| 7 | $41,285 | $31,738 | $136,934 | $167,082 |
| 8 | $41,650 | $32,690 | $157,142 | $184,600 |
| 9 | $42,026 | $33,671 | $178,189 | $202,376 |
| 10 | $40,614 | $34,681 | $200,119 | $218,562 |
Your rate decides the answer
A half-point lower rate can move the break-even year by years. Compare real quotes to run this with your actual rate.
Free to compare. No obligation.
How the rent vs. buy comparison works
Comparing rent with a mortgage payment isn't enough. Owning also costs property tax, insurance, maintenance, PMI and the closing costs to buy and sell. Renting has a hidden cost too: the down payment could have been invested instead. This calculator follows both paths month by month and compares your net worth at the end.
- If you buy, your net worth is the home's value after selling costs, minus what you still owe, plus anything you saved when owning cost less than renting.
- If you rent, your net worth is the down payment and closing costs you didn't spend, invested, plus anything you saved each month when renting cost less.
Reading the example
For a $400,000 home with 10% down at 6.5%, owning costs about $3,275 in the first month once you count tax, insurance, PMI and 1% a year for maintenance, against $2,215 to rent a similar home. Over a 10-year stay, renting and investing the difference comes out ahead by about $18,000. Buying pulls ahead in year 13, because rent keeps rising while the mortgage payment stays the same and the loan balance falls.
What moves the answer most
- How long you stay. Buying and selling costs about 9% of the price here. The longer you stay, the more time you have to earn that back.
- Price-to-rent ratio. Where homes cost many years of rent, renting usually wins. Where rent is high compared with prices, buying wins sooner.
- Your rate. A lower rate cuts the biggest owning cost.
- Growth assumptions. Home value growth and investment returns are guesses. Try lower and higher values to see how sensitive your answer is.
Income taxes aren't included: no mortgage interest deduction, and no tax on investment gains or home sale gains. See how we calculate.
Frequently asked questions
Is it better to rent or buy a house?
It depends mostly on how long you'll stay and how prices compare with rents where you live. Buying has big one-time costs, often around 9% of the price to buy and later sell, so it usually needs several years to beat renting. With the example numbers, renting and investing the difference stays ahead for 12 years and buying pulls ahead in year 13. Enter your own rent, price and rate above.
Is it cheaper to rent or buy a house?
Month to month, renting is often cheaper at first, because owning adds property tax, insurance, maintenance and sometimes PMI on top of the mortgage. Over time that can flip: rent usually rises every year, while a fixed-rate mortgage payment stays the same and builds equity.
What is the price-to-rent ratio?
The home price divided by a year of rent for a similar home. A $400,000 home that would rent for $2,200 a month has a ratio of about 15. The higher the ratio, the more renting tends to win; the lower it is, the sooner buying pays off.
Does this include the mortgage interest tax deduction?
No. Most homeowners take the standard deduction, so the mortgage interest deduction doesn't change their taxes. The calculator also leaves out taxes on investment gains and on home sale profits.