Rent vs Buy Calculator
Compare the monthly costs of renting versus buying a home. Calculate mortgage payments, total cost of ownership, and how many years until buying becomes cheaper.
A rent vs buy calculator answers one of the most consequential questions in personal finance: does it make more sense to keep paying a landlord, or to sign a 30-year mortgage and build equity in a home of your own? The New York Times popularized the modern rent-vs-buy framework, and our free calculator uses the same core idea — compare the true all-in cost of owning (mortgage principal and interest, property tax, insurance, maintenance, HOA, closing costs) against renting, net of the opportunity cost of tying up a large down payment that could otherwise be invested in a diversified stock portfolio.
The headline shortcut pros use is the price-to-rent ratio: divide the home price by 12 times the annual rent for a comparable property. A ratio below 15 generally favors buying, between 15 and 20 is a toss-up that depends on local taxes and how long you'll stay, and above 20 tilts toward renting and investing the difference. In expensive US coastal metros like San Francisco, Seattle, or New York, ratios frequently exceed 25, while much of the Midwest and South sits comfortably under 15.
Who should use this tool? Anyone weighing a home purchase, negotiating a lease renewal, relocating for work, or running sensitivity analysis on the assumptions behind their 5-year plan. If you want to dig deeper into the purchase mechanics, pair this with the mortgage payoff and down payment calculators. Remember that this calculator is educational and not financial advice — housing decisions also involve non-financial factors like school districts, commute, family stability, and personal preference that no spreadsheet can quantify.
Quick answer: Renting $2,000/month vs buying a $400,000 home with 20% down at a 6.5% mortgage rate and 1.2% property tax yields a monthly ownership cost of roughly $2,422 (P+I plus tax, excluding maintenance) — about $422 more than renting. The 5-year rule: if you won't stay long enough to amortize 6-10% in closing costs, renting usually wins. This calculator compares both scenarios side-by-side.
Inputs
Quick presetsWhat you pay (or would pay) for an equivalent unit in the same neighborhood. Compare apples to apples — not a studio against a 4-bedroom house.
All-in purchase price you'd actually pay, net of expected seller concessions. Use recent comps or your pre-approval, not the asking price.
Your equity stake as a percentage. 20% avoids PMI on conventional loans; FHA allows 3.5% minimum; VA and USDA can be 0% for eligible borrowers.
30-year fixed rate you've been quoted. Use Freddie Mac's weekly PMMS survey for a current benchmark before you have a real lock.
Annual property tax as a percent of home value. Ranges from ~0.3% in Hawaii/Alabama to 2%+ in Texas and New Jersey. Check your county assessor's site.
Results
How to use this calculator
Five inputs drive the comparison. **Monthly rent** is what you currently pay (or would pay) for an equivalent unit in the same neighborhood — don't compare a studio rental to a 4-bedroom house. **Home price** is the all-in purchase price including any seller concessions you expect to negotiate. **Down payment** is your equity stake as a percentage; 20% avoids private mortgage insurance (PMI) in most US conventional loans, while FHA loans allow as little as 3.5%.
**Mortgage rate** is the 30-year fixed rate you've been quoted; use Freddie Mac's weekly survey for a current benchmark. **Property tax rate** varies enormously by state — Texas and New Jersey run 2%+, while Hawaii and Alabama hover near 0.3%. Once you hit Calculate, watch the break-even point: if you're confident you'll stay longer than that, buying generally wins; shorter than that, renting plus investing typically comes out ahead. Stress-test by dropping the home-appreciation assumption — housing has not always beaten inflation.
Worked examples
Sarah, renting in Austin, considering a starter home
Sarah pays $2,100/month for a 1-bedroom apartment in Austin. She's eyeing a $425,000 townhouse with 10% down ($42,500) at a 6.75% mortgage rate. Austin's property tax is ~2.1% — one of the highest in the country. Plugging these numbers in, her monthly cost of owning (P&I plus property tax) lands near $3,225, about $1,125 more than renting. The calculator's break-even point comes in around year 6. If she expects to stay at least 7 years and the home appreciates at 3% annually, buying looks reasonable; if her job might relocate her to San Jose in 3 years, renting is the safer bet.
Marcus, debating Seattle condo vs. index funds
Marcus has $150,000 saved and is weighing a $750,000 Seattle condo (20% down, 6.5% rate, 1.1% property tax, $400/month HOA) against renting a similar unit for $3,200/month. Seattle's price-to-rent ratio sits near 19.5 — borderline. Running the calculator, the monthly cost of owning exceeds $5,200 once HOA and maintenance are added, a ~$2,000 premium over renting. If Marcus invested the down payment plus monthly difference in a total-market index fund returning 7%, the renting-plus-investing path rivals ownership over 10 years. This is why the opportunity cost of the down payment matters so much.
Elena and Dan, relocating every 3–4 years for the military
Elena is an active-duty Navy officer; she and Dan expect PCS orders roughly every 3 years. A $380,000 home near base at 6.5% with 5% down looks affordable on paper — monthly cost around $2,900 vs. $2,100 rent. But running the calculator, the break-even point lands near year 7, well past their expected tenure. Layer in 2–3% seller costs on the way out (realtor commission, transfer tax) and they'd likely lose money on every move. They opt to rent, put the would-be down payment into a Roth TSP and brokerage account, and plan to buy for real when they retire from active duty and settle in one location.
Frequently asked questions
What is the price-to-rent ratio and how do I use it?
Divide home price by 12 × monthly rent for a comparable property. Under 15 usually favors buying, 15–20 is neutral, over 20 tilts toward renting and investing the difference. The ratio is a quick screen; it ignores tax, maintenance, and how long you'll stay, so always follow up with a full calculation.
What's the typical break-even horizon for buying?
Most rent-vs-buy analyses show a break-even of 5 to 7 years in typical US markets. Transaction costs are the main reason: closing costs around 5% of the purchase price (2–3% buyer, 5–6% seller on the way out) plus realtor commissions can take years of equity growth to recover. Short stays almost always favor renting.
Why is the down payment considered an opportunity cost?
Cash locked into home equity isn't earning market returns. A $100,000 down payment invested at 7% grows to roughly $197,000 in 10 years, or $387,000 in 20. The calculator implicitly accounts for this when you compare renting-plus-investing vs. buying, which is why low price-to-rent ratios shift the math toward ownership.
What phantom costs of ownership should I budget?
Property tax (0.3–2.5% of home value annually), homeowners insurance ($1,200–$3,000/year typical), maintenance (~1% of home value per year as a rule of thumb), HOA fees if applicable, and closing costs of roughly 2–5% up front. These routinely add $500–$1,500/month on top of mortgage principal and interest.
How do I factor in home appreciation?
US home prices have historically tracked inflation plus 1% real — call it 4% nominal long-term. Any projection above 5% is aggressive. Be especially careful extrapolating recent booms; 2020–2022 appreciation of 15–20%/year is not a sustainable baseline. Stress-test by running a 2% appreciation scenario.
What about mortgage interest tax deduction?
Since the 2017 Tax Cuts and Jobs Act raised the standard deduction, most US households no longer itemize, meaning mortgage interest deduction provides no marginal benefit. Only households with large mortgages in high-tax states typically benefit. Don't assume a deduction you won't actually claim.
Is buying always a good inflation hedge?
A fixed-rate mortgage payment doesn't rise with inflation, which is a real benefit. But property taxes, insurance, and maintenance do inflate — and those often grow faster than headline CPI. Housing is a decent inflation hedge over long horizons but not a perfect one, and it's highly illiquid.
When does renting clearly win?
Short expected tenure (under 5 years), high price-to-rent ratios (over 22), unstable job situation, desire for geographic flexibility, or strong preference for investing the capital elsewhere. Renting is not 'throwing money away' — it's paying for flexibility and shifting maintenance/market risk to the landlord.