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MoneyMath

Rent vs Buy Calculator

Should you buy a home or keep renting? This calculator compares the two over your time horizon — including mortgage interest, property tax, maintenance, home appreciation, rent increases, and the opportunity cost of investing your down payment if you rent instead.

🟢 Updated April 2026👤 Reviewed by MoneyMath Editorial⚡ Runs in your browser · inputs never leave your device
Home purchase
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Rent instead
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Your situation
Buying wins by
$28,502.70
after 7 years · net-worth difference
Monthly buy cost (PITI+HOA+upkeep)$3,306.55
Down payment$85,000.00
Total mortgage interest$157,512.46
Total property tax paid$36,364.46
Home value at sale$524,175.79
Net sale proceeds (after 6% cost)$183,308.98
Total rent paid$221,938.91
Invested portfolio if renting$195,711.70

Is it better to rent or buy right now?

Short answer: depends on how long you'll stay and the rent-to-price ratio in your area. The usual break-even is 5-7 years. Shorter than that, transaction costs (~6% selling + ~2% buying + closing) eat most of any appreciation gain.

What this calculator actually does

It runs a month-by-month simulation of both paths: (1) buying — mortgage + property tax + insurance + HOA + maintenance, with home appreciating each month; (2) renting — paying rent with annual increases, investing the down-payment-you-didn't-use plus any monthly savings from lower rent. At the end of your time horizon, it sells the home (minus 6% realtor/closing) and compares the net-worth outcomes.

The 5% rule of thumb

A shortcut from Ben Felix: if annual rent is less than 5% of the home's price, renting is usually cheaper over a medium horizon. Breakdown: 1% property tax + 1% maintenance + 3% opportunity cost (6% return minus 3% appreciation). So if a $500K home rents for less than $25K/yr ($2,083/mo), renting likely wins.

When buying clearly wins

  • You'll stay 10+ years in the same place
  • Rent is close to or exceeds the mortgage PITI in your market
  • You'd otherwise leave the down payment in cash (not invest it)
  • You value the stability / lifestyle / customization a home offers

When renting clearly wins

  • Less than 5-year horizon (job, grad school, unstable relationship)
  • Rent-to-price ratio below 4% — usually HCOL coastal cities (SF, NYC, Seattle)
  • You'll invest the difference consistently (renters who spend the savings fall behind buyers on wealth-building over long horizons)
  • You have better uses for the capital (starting a business, student loans at 7%+)

Costs buyers forget

Closing costs (~2-3% at purchase), realtor fees (~6% at sale), HOA (often $200-600/mo), maintenance (plan 1% of home value annually — roof, HVAC, appliances, plumbing all wear out), property tax reassessments, PMI if less than 20% down, homeowners insurance rising (up 20%+ in CA/FL/TX in 2024-2026).

Costs renters forget

Rent increases compound — 3-5% a year compounds to nearly double rent over 20 years. Moving costs. Landlord non-renewal risk. Can't customize. Loss of forced-savings mechanism (mortgage principal is auto-investing in your home).

Frequently Asked Questions

How long do I need to live there for buying to break even?

Usually 5-7 years. Less than that and the 6% sale cost + ~2% closing fees + negligible principal built in early years mean renting wins. Use the time-horizon slider to find your personal break-even.

What if I put down less than 20%?

You'll pay PMI (private mortgage insurance) — about 0.5-1.5% of the loan annually, until you reach 20% equity. This calculator doesn't auto-add PMI; add ~$50-250/mo to insurance for a rough estimate, and remove it once you'd hit 20%.

Is the mortgage interest deduction still worth it?

Usually not since the 2017 tax reform doubled the standard deduction. Most homeowners with mortgages under ~$500K take the standard deduction instead. The calculator applies a reduced tax-benefit factor to reflect this.

Should I use current mortgage rates or historical?

Use current (or what you'd actually lock). Freddie Mac publishes weekly averages. As of early 2026 rates are 6.5-7.5% on 30-year fixed — significantly higher than the 2-4% era of 2010-2021.

What about house hacking / renting out rooms?

Not modeled here. House hacking dramatically improves the buy case — you're effectively getting rent income that offsets mortgage. Run the numbers with offset rent as a negative monthly cost.

Do I include utilities and commute?

No — this calculator assumes they wash out. In practice, buying often means longer commute (suburbs) and higher utilities (bigger space), which could shift the math by $200-500/mo.