Rent vs. Buy: which one pays off?
Compare the net worth you'd end up with buying a home versus renting and investing the difference, over the number of years you choose.
If you bought
Below 20% typically means paying PMI on top of the numbers here.
National average is about 0.99%; check your county's actual rate.
HOA dues, homeowners insurance, and maintenance/repairs combined.
Loan origination, appraisal, title, and recording fees, as a % of price.
Agent commission and closing costs, as a % of the sale price.
If you rented
What the money you didn't spend buying would earn if invested instead.
Buying would leave you with
$3,669
more net worth after 10 years
Net worth buying
$234,213
Net worth renting
$230,544
Monthly mortgage payment
$2,094
Cash needed to buy
$94,461
Monthly property tax
$339
Closing costs
$12,321
Net worth over time
Estimate calculated from the numbers you entered. This is not financial, tax, or legal advice — always consult a qualified professional before making significant financial decisions.
What this rent vs. buy calculator does
It compares the net worth you'd end up with buying a home versus renting and investing the difference, over a horizon of years you choose. It's the question every renter weighing a purchase eventually asks: does buying the place I'd live in actually pay off financially, or would I come out ahead investing the down payment and staying a renter?
- Buying
- Renting
- Break-even year
The methodology
Both scenarios start from the same cash on hand today. Buying, that cash covers the down payment and closing costs, and every month you pay the mortgage plus the costs of ownership — property tax, HOA dues, homeowners insurance, and maintenance. Final net worth is the appreciated home value minus the remaining mortgage balance and the costs of selling. Renting, that same cash is invested from day one, and any month rent costs less than the buying payment would, the difference is invested too. Final net worth is the value of that investment portfolio.
Net worth buying = Home value − Remaining mortgage − Selling costsA worked example
With a $410,700 home (3% closing costs, 20% down), a mortgage at 6.58% for 30 years, property tax at the national average of 0.99% a year (about $339/month) plus $350/month in HOA, insurance, and maintenance, and 3% annual appreciation, versus renting at $2,100/month (rising 3% a year) and investing the difference at 6% a year, at 10 years buying would leave a net worth of about $234,213 versus about $230,544 renting — a difference of roughly $3,700in favor of buying. That's a near-toss-up: stretch the same assumptions to a 20-year horizon and buying's edge grows to roughly $93,000, since the fixed cost of closing gets spread over more years and the mortgage eventually gets paid off.
Common mistakes when comparing
- Ignoring the opportunity cost of the down payment: comparing only “mortgage payment vs. rent” without accounting for what that down payment and closing-cost cash could have earned invested elsewhere tilts the comparison toward buying.
- Overestimating home appreciation: over the long run, US home prices have historically appreciated close to inflation in real terms in most metro areas, well below the stock market's long-run real return — plugging in an overly optimistic rate skews the result.
- Ignoring the cost of selling: selling a home typically costs 6-8% of the sale price between agent commissions and closing costs, which eats into your final net worth if you sell within the horizon.
- Assuming property tax stays flat forever: this calculator taxes your original purchase price at a constant rate for simplicity, but many counties reassess periodically and rates vary widely (roughly 0.3% to 2.2% of home value depending on the state) — swap in your county's actual rate for a more accurate picture.
- Reducing everything to a number, ignoring your life situation: if you expect to relocate within a few years, renting is usually more flexible even when the financial math favors buying over a longer horizon.
Frequently asked questions
Is this the same as the Rental Property ROI calculator?
No. The Rental Property ROI calculator is built for landlords: it checks whether buying a home to rent out is a good investment. This calculator is built for you as a renter or buyer: it compares whether it pays off financially to buy the home you'd live in yourself, versus continuing to rent and investing the difference.
Why does the calculator invest the money you don't spend buying?
To keep the comparison fair. Buying requires cash upfront (down payment + closing costs) that renting doesn't — that money doesn't vanish if you choose to rent, you can invest it instead. The same goes for the monthly gap between what buying would cost and what rent actually costs, whenever rent is cheaper. Without this assumption, the comparison would be tilted toward buying by default.
What investment return should I use as a benchmark?
It depends on where you'd actually put that money. A diversified portfolio of stock index funds has historically returned somewhere around 7-10% annually over the long run before taxes and inflation, while more conservative options (high-yield savings, CDs) return meaningfully less. Use a realistic figure for your own risk tolerance, not the most optimistic one.
Why does the result change so much depending on the number of years?
Because the one-time costs of buying (closing costs, and selling costs whenever you eventually sell) get spread over more time the longer you stay, while renting never carries that entry/exit cost. Over a short horizon, renting usually wins simply by avoiding those fixed costs. Over a long horizon, buying usually gains ground from appreciation and from no longer paying anything once the mortgage is paid off.
Does this account for the mortgage interest deduction?
Not directly, and that's deliberate. The federal mortgage interest deduction only helps if you itemize deductions instead of taking the standard deduction ($15,750 single / $31,500 married filing jointly for the 2026 tax year) — and after the 2017 tax law changes, most homeowners no longer itemize, because their mortgage interest plus other deductions don't exceed the standard deduction. If you expect to itemize, your real after-tax cost of owning is a bit lower than what's shown here; run your own numbers with a tax professional rather than assuming a blanket benefit.
Does this calculator account for non-financial factors?
No. It only compares the financial outcome. Things like the stability of owning your home, the flexibility of renting, ties to a neighborhood, or the psychological weight of a 30-year mortgage matter just as much and can't be reduced to a single number. Treat this as one input to the decision, not the whole answer.
What actually moves this number
Specific levers, and roughly what each one is worth. Not “save more” — the things that change the figure above by an amount you can measure.
Get your local price-to-rent ratio first
Divide the price of a home by the annual rent for a comparable one. Under about 15 leans toward buying, over about 20 leans toward renting. It varies more between two US metros than any other input, which is why national rent-versus-buy conclusions are useless.
Be honest about the holding period
A buy-and-sell round trip costs roughly 8-10% of the price. Below about five years, appreciation rarely covers it and renting usually wins even in a rising market. This is the input people fudge, and it is the one that decides the answer.
Only count the mortgage interest deduction if you will itemize
The 2026 standard deduction is $16,100 single and $32,200 married filing jointly. If your mortgage interest plus capped state and local taxes plus charitable giving does not clear that, the deduction is worth exactly nothing to you — and for most households it does not.
Charge the renter side for investing the difference
A fair comparison assumes the renter invests both the down payment and the monthly gap. If you would not actually do that, the comparison is closer than the spreadsheet says — a mortgage is forced saving, which is a real advantage even though it is not an arithmetic one.
What this calculator does not cover
Every calculator simplifies, and the useful thing is knowing exactly where. These are the specific gaps between this estimate and your real situation:
- The break-even depends heavily on how long you stay, and that is the input people are least honest with themselves about. A buy-and-sell round trip commonly costs 8% to 10% of the price, which appreciation has to cover before ownership gets ahead.
- It cannot know your local price-to-rent ratio, which is the single biggest determinant of the answer and varies enormously between metros and even neighborhoods.
- Home price appreciation is an assumption, not a forecast. Small changes to it move the result a great deal, which is a reason to test a pessimistic case rather than trust a single run.
- The mortgage interest deduction is worth nothing to filers who take the standard deduction, which is now most of them. Do not count it unless your itemized deductions genuinely exceed the standard amount.
For anything that turns on an exact figure, use the primary sources below or a qualified professional. How these limits are decided and disclosed is described in the editorial standards.