Rent vs. Buy Calculator
Find out whether buying or renting makes more financial sense over your planned time horizon.
Buying Costs
Renting & Assumptions
Net Buy Cost
$202,766
Net Rent Cost
$183,242
Home Equity Built
$251,780
First Year Buying Is No Costlier
Not reached
Renter’s Upfront Cash, Invested
$180,978
Net Cost Comparison
Includes your transaction costs and tax growth. The renter invests the upfront cash difference; whichever option costs less each month invests the monthly difference. Net rent cost is adjusted by the investment gains difference. Assumptions are not forecasts. PMI, tax deductions and renter’s insurance are not modeled.
Annual net-cost comparison
| Year | Buy net cost | Rent net cost |
|---|---|---|
| 1 | $58,676 | $19,684 |
| 2 | $76,894 | $39,098 |
| 3 | $94,630 | $58,231 |
| 4 | $111,856 | $77,072 |
| 5 | $128,543 | $95,607 |
| 6 | $144,661 | $113,825 |
| 7 | $160,177 | $131,712 |
| 8 | $175,058 | $149,254 |
| 9 | $189,267 | $166,435 |
| 10 | $202,766 | $183,242 |
Break-even is evaluated at each year-end through your chosen horizon. Try a lower investment return, a drop in home value, or a shorter stay to see how sensitive the result is.
Should I Rent or Buy? The 2026 Guide
The classic debate of renting vs. buying a home is often simplified to "renting is throwing money away." But in 2026, with higher interest rates and soaring home prices, the math is far more nuanced. Our Rent vs. Buy calculator removes the emotion and gives you hard numbers, accounting for opportunity costs, property taxes, maintenance, and home appreciation.
The Hidden Costs of Buying a Home
When you buy a home, your mortgage is only the beginning. To make an accurate comparison against renting, you must factor in the "sunk costs" of homeownership that do not build equity:
- Property Taxes: Averaging 1% to 2% of the home's value annually in the US, paid forever.
- Homeowners Insurance and HOA Fees: Mandatory monthly costs that provide no financial return.
- Maintenance and Repairs: A general rule of thumb is to budget 1% of the home's value per year for maintenance (new roofs, broken AC units, landscaping).
- Closing Costs: Buying a home costs roughly 2% to 5% of the purchase price, and selling it costs roughly 6% to 10% (realtor commissions + closing costs).
The Hidden Costs of Renting
Renting has a different set of financial drawbacks:
- 0% Return on Investment: You are paying your landlord's mortgage, building their equity instead of yours.
- Rent Increases: Unlike a fixed-rate mortgage, your rent is virtually guaranteed to increase every year based on inflation and local market demand.
- No Tax Benefits: Homeowners can often deduct their mortgage interest and property taxes, lowering their effective cost (see our Mortgage Calculator for interest totals).
The Deciding Factor: How Long Will You Stay?
The break-even horizon is the most critical metric in this calculation. This is the year where the accumulated costs of renting finally exceed the accumulated costs of buying (including the massive fees to eventually sell the home).
If your time horizon is shorter than the break-even year (typically 4 to 7 years), financially, you are better off renting. In the short term, the massive transaction costs of buying and selling a home wipe out any equity or appreciation you might gain.
If you plan to stay in the home for 10, 15, or 30 years, buying almost always wins mathematically due to the long-term leverage of real estate appreciation and forced savings.
The Opportunity Cost: What If You Invested Your Down Payment?
Our calculator includes a critical and often-overlooked metric: Investment Return Rate.
If you buy a $400,000 home with 20% down, that is $80,000 locked into brick and mortar. If you rent instead, you keep that $80,000. If you invest that money into an S&P 500 index fund returning 7% annually, the compound growth over 10 years will be massive. A true rent vs. buy analysis credits the renter with the theoretical returns they make on that invested down payment.
Frequently Asked Questions
Is a mortgage cheaper than rent?
It depends entirely on your local market and interest rates. In many major US cities in 2026, the monthly cost of a new mortgage (PITI) is significantly higher than renting an equivalent property. However, over a 30-year span, buying normally becomes cheaper as rents climb while your fixed mortgage payment stays the same.
What is the 5% Rule?
The 5% rule (popularized by Ben Felix) estimates the unrecoverable costs of homeownership at roughly 5% of the home's value annually (1% property tax + 1% maintenance + 3% cost of capital/debt). You divide the home's value by 5%, then divide by 12. If a home costs $500,000, the unrecoverable cost is roughly $25,000/year or $2,083/month. If you can rent an equivalent home for less than $2,083/month, renting is financially optimal.
Does building equity guarantee wealth?
Not always. Real estate is highly geographic. While national averages show properties appreciating, local markets can stagnate or decline. Furthermore, your first 5-7 years of mortgage payments go almost entirely toward interest, meaning you build very little equity early on.
Continue your financial research
Use these closely related USFinNexus guides and tools to plan your next step.
Test the time horizon and ownership expenses in this rent-versus-buy planning guide.
Broader market stories need local evidence; see the limits of the “silver tsunami” housing narrative.
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- Home Affordability CalculatorEstimate a home price that fits your budget.