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Rent vs Buy Calculator: Break-Even Year & Net Worth
Last updated: · Rate context: Freddie Mac PMMS, Sept. 17, 2026
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Is it better to rent or buy?
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This rent vs buy calculator tells you whether renting or buying leaves you with more money after the number of years you plan to stay. Enter the home price, down payment, mortgage rate, rent and a few cost assumptions, and it compares your net worth if you buy with your net worth if you rent, year by year, and finds the break-even point. It works as a should I rent or buy calculator, a buy vs rent calculator and a home affordability check in one place.
Whether you are a first-time buyer or weighing a move, this rent vs buy calculator replaces a gut feeling with a number you can test.
How this rent vs buy calculator works
The tool puts both paths on the same footing. The buyer pays the down payment and closing costs, then covers the mortgage, property tax, insurance, maintenance and HOA dues. The renter invests that same cash and pays rent. Each month, whoever has the lower housing cost invests the difference, so both paths spend the same total money.
What this rent vs buy calculator needs from you
- Home price, down payment, rate and term: they set your loan and your mortgage payment.
- Monthly rent for a similar home: compare like with like, with a similar size and location.
- How long you will stay: the single most important input, because buying has high up-front and exit costs.
- Optional assumptions: property tax, insurance, maintenance, HOA, home price growth, rent increases, investment return, closing and selling costs.
How to read the rent vs buy result
The headline number is the gap in net worth at the end of your stay. Buyer net worth is the home’s value minus the loan balance and selling costs. Renter net worth is the invested portfolio. The line chart shows both over 30 years, so you can see where they cross and how fragile the result is.
Is it better to rent or buy in 2026
It depends on how long you stay, and at today’s mortgage rates renting usually wins for short stays. The first table runs this rent vs buy calculator on a $400,000 home with 20% down at 6.95%, against $2,200 of monthly rent.
| Years you stay | Net worth if you buy | Net worth if you rent | Who comes out ahead |
|---|---|---|---|
| 5 years | $134,827 | $173,128 | Rent by $38,301 |
| 7 years | $170,988 | $208,844 | Rent by $37,856 |
| 10 years | $231,037 | $266,219 | Rent by $35,182 |
| 15 years | $349,395 | $372,852 | Rent by $23,457 |
| 30 years | $1,016,123 | $895,318 | Buy by $120,805 |
In this case buying overtakes renting only after about 20 years, because the monthly cost of owning is far above the rent. That is not a universal answer. A lower rate, a higher rent or faster home price growth all move the break-even earlier, as the sensitivity table below shows.
The true monthly cost of owning vs renting
Most people compare rent with the mortgage payment alone, which makes buying look cheaper than it is. A fair rent vs buy calculator adds every recurring cost of ownership. Here is the first month on the same $400,000 home.
| Monthly cost | Own | Rent |
|---|---|---|
| Mortgage principal & interest | $2,118 | — |
| Property tax (1.1% of value) | $367 | — |
| Homeowners insurance ($2,000 a year) | $167 | — |
| Maintenance (1% of value a year) | $333 | — |
| Rent | — | $2,200 |
| Total | $2,985 | $2,200 |
Only part of the $2,985 builds wealth. The principal portion of the mortgage payment becomes equity, but interest, property tax, insurance and maintenance are gone for good. The rest of the money you would have spent on the home is what the renter invests instead. You can see the payment itself in detail in our mortgage calculator.
Rent vs buy break-even: how long you need to stay
Buying costs money at both ends. In the base case, closing costs of 3% are $12,000 and selling costs of 6% are about $32,000 on a $537,567 home after ten years. Those costs have to be earned back through equity and price growth before buying pulls ahead.
A common rule of thumb says to buy only if you expect to stay at least five years. The calculator tests that for your own numbers. The break-even year is the first year after which buying stays ahead through year 30, so a brief crossing that later reverses does not count.
What changes the rent vs buy answer most
Four inputs swing the result more than any others: rent, home price growth, mortgage rate and how long you stay. The table changes one assumption at a time in the base case and reports the result after ten years.
| Assumption | Net worth: buy | Net worth: rent | Break-even |
|---|---|---|---|
| Base case ($2,200 rent, 3% growth, 6.95%) | $231,037 | $266,219 | Year 20 |
| Rent of $1,800 | $231,037 | $339,674 | Not within 30 years |
| Rent of $2,600 | $233,483 | $195,210 | Year 7 |
| No home price growth (0%) | $101,724 | $245,723 | Not within 30 years |
| 5% home price growth | $338,189 | $281,816 | Year 5 |
| Mortgage rate of 6% | $237,518 | $233,778 | Year 10 |
| Mortgage rate of 7.5% | $227,569 | $285,594 | Year 30 |
Two things stand out. A $400 swing in monthly rent flips the winner, and zero home price growth makes buying lose badly. Because nobody can forecast prices, run a cautious case and a hopeful case and decide whether you are comfortable with both.
Opportunity cost: what your down payment could earn
A down payment is not free money. The $80,000 down payment and $12,000 of closing costs in the base case could be invested at 6% instead. That is the renter’s starting portfolio in this rent vs buy calculator, and it is why renting wins early: the invested cash compounds while the buyer’s cash is locked in the house.
The reverse also holds. When rent is higher than the cost of owning, the buyer invests the difference. The comparison is symmetrical, so neither side gets an unfair advantage.
Price-to-rent ratio: a quick check
The price-to-rent ratio divides the home price by a year of rent. With a $400,000 home and $2,200 of rent, that is $400,000 ÷ $26,400, or about 15.2. A common rule of thumb says ratios under 15 favor buying, while ratios above 20 favor renting.
It is only a first screen. It ignores your mortgage rate and how long you will stay, which is why you should confirm it with the full rent vs buy calculator above.
Costs people forget when they buy
- Closing costs: typically a few percent of the price, paid at purchase.
- Selling costs: agent commissions and fees often reach 5% to 6% of the sale price.
- Maintenance: a common planning figure is about 1% of the home’s value each year.
- Property tax changes: bills can rise after a sale as the home is reassessed.
- HOA and special assessments: dues can rise, and large repairs can be billed to owners.
- Mortgage insurance: with less than 20% down you may pay PMI. See how it works in our mortgage calculator with PMI.
Taxes can help or not. Mortgage interest and property tax are deductible only if you itemize, and the 2026 standard deduction of $16,100 for single filers and $32,200 for married couples filing jointly means many owners do not. This rent vs buy calculator does not assume a tax break.
Before you decide: budget and savings checks
Winning the math is not enough. Make sure you can afford the full cost of owning with a cushion. Start with your take-home pay from our paycheck calculator, then check how much a home payment fits under the 28/36 rule in our mortgage guide.
Also protect your retirement savings. Draining a 401k for a down payment can cost you years of growth, and you can see the effect in our 401k calculator. If you plan to finance furniture or repairs, test the cost in our personal loan calculator first.
Bookmark this rent vs buy calculator and run it again whenever rates, rents or your plans change. A few seconds can save you from a decision that costs tens of thousands of dollars.
Frequently asked questions about the rent vs buy calculator
Is it better to rent or buy a house in 2026?
It depends on how long you stay, your mortgage rate and local rents. In this rent vs buy calculator, a $400,000 home, 20% down, a 6.95% rate and $2,200 of rent, renting stays ahead through at least year 15 and buying wins by about $120,805 after 30. A lower rate or higher rent shortens that wait.
How long do you need to stay in a house for buying to beat renting?
Plan on at least five years, and often longer at current rates. Closing costs of about 3% and selling costs of about 6% have to be earned back through equity and price growth. In the rent vs buy calculator’s base case, buying stays ahead from about year 20, but a $2,600 rent moves it to year 7.
What is the break-even point in a rent vs buy calculator?
In a rent vs buy calculator, the break-even point is the first year after which buying leaves you with more net worth than renting through year 30. It reflects up-front costs, mortgage interest, property tax, maintenance, price growth and what the renter earns by investing the down payment instead.
What costs does a rent vs buy calculator include?
A complete one includes mortgage principal and interest, property tax, homeowners insurance, maintenance, HOA dues, closing costs and selling costs on the buy side, and rent plus yearly rent increases on the rent side. It also counts what the renter earns by investing the down payment and monthly savings.
How much should rent be for buying to make sense?
In the base case, rent of about $2,600 a month, versus a first-month ownership cost of $2,985, makes buying win after ten years by about $38,273. At $1,800 a month, renting wins by $108,637 and buying never catches up within 30 years.
Does home price growth change the rent vs buy result?
Yes, in this rent vs buy calculator it matters more than almost any other input. With 0% growth the buyer ends ten years about $144,000 behind the renter. With 5% growth the buyer is ahead by about $56,373 and breaks even in year 5. Since future growth is unknown, test low, middle and high cases.
What is the price-to-rent ratio?
It is the home price divided by a year of rent. A $400,000 home that rents for $2,200 a month has a ratio of about 15.2. A common rule of thumb says under 15 favors buying and over 20 favors renting. It is a quick screen, not a replacement for a full comparison.
Why does renting often win at today’s mortgage rates?
At a 6.95% rate, most early mortgage payments go to interest, and property tax, insurance and maintenance add more. The renter invests the cash that would have gone into the house. At 6% the base case flips to a small buyer win after ten years, so rates matter a lot.
Does the rent vs buy calculator include the mortgage interest tax deduction?
No. It assumes no tax break because the 2026 standard deduction of $16,100 for single filers and $32,200 for married couples filing jointly means many owners do not itemize. If you do itemize, buying may look somewhat better than the calculator shows.
What should I check before deciding to buy a home?
Check that your total housing payment fits your budget, usually under 28% of gross income, and that you keep an emergency fund after the down payment. Avoid draining retirement savings, and compare the full monthly cost, not just the mortgage payment, with your rent.
Sources: Freddie Mac Primary Mortgage Market Survey (30-year fixed rate, Sept. 17, 2026); CFPB: Owning a Home; IRS Revenue Procedure 2025-32 (2026 standard deduction); Tax Foundation (property tax rates).