Rent vs Buy Calculator
Compare the true financial cost of renting versus buying a home over time.
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Frequently Asked Questions
Is it better to rent or buy a home?
It depends on timeline, finances and market. Buying is better if you plan to stay 5+ years, can afford a 10-20% down payment, and home prices are reasonable relative to rents. Renting is better for flexibility, expensive markets (NYC, SF) and when you lack a down payment or have high debt.
What is the price-to-rent ratio?
The price-to-rent ratio compares home prices to annual rents. Divide home price by annual rent. A ratio below 15 favors buying; 15-20 is neutral; above 20 favors renting. In San Francisco the ratio exceeds 40, strongly favoring renting. In many Midwest cities it is below 15, favoring buying.
How long do you need to stay to make buying worth it?
The break-even point for buying vs renting is typically 3-7 years depending on transaction costs, mortgage rate and market appreciation. The 5-year rule suggests staying at least 5 years to recoup transaction costs (real estate agent fees, closing costs, moving). Shorter stays usually favor renting.
Rent or buy over five years: a worked comparison
The question is not "is rent money wasted". Both renting and buying have costs that disappear (rent on one side, interest, taxes, insurance, maintenance and transaction costs on the other) and buying also builds equity and carries price risk. The comparison below uses a $400,000 home with 10% down at 6.5% against a $2,000 rent rising 3% a year, with the home appreciating 3% a year.
| Five year totals | Buying | Renting |
|---|---|---|
| Rent paid | $127,419 | |
| Mortgage interest | $113,526 | |
| Principal paid (builds equity) | $23,000 | |
| Property tax and insurance (1.5% of value a year) | $30,000 | |
| Maintenance (1% of value a year) | $20,000 | |
| Closing costs to buy (3% of loan) | $10,800 | |
| Cost to sell (6% of sale price) | $27,823 | |
| Gone for good | $202,149 | $127,419 |
| Equity at sale: appreciation plus principal | $86,710 | |
| Net cost after equity | $115,439 | $127,419 |
The buyer comes out about $12,000 ahead over five years in this scenario, before counting the return the renter could earn on the $40,000 down payment and $10,800 closing costs, which at 5% a year is about $14,000. On these inputs the two options are close to a tie.
What tips it either way
Appreciation: at 1% a year instead of 3%, equity from price gains falls from $63,710 to $20,400 and renting wins by about $30,000. At 5%, buying wins by about $59,000. Time: the $38,600 of transaction costs is spread over the holding period, so buying improves every year you stay; at three years, renting usually wins unless prices rise fast. Rent level: at $2,500 rent for the same home, the renter pays $159,000 over five years and buying wins clearly. Rates: at 5.5% the buyer's five year interest drops by about $17,000.
The price-to-rent ratio shortcut
Divide the purchase price by a year of rent for a comparable home. Below 15, buying usually wins. Above 20, renting usually wins. Between the two it depends on how long you stay and what prices do. The example above is 400,000 / 24,000 = 16.7, which is why the result is close. Many coastal metros sit above 25, and much of the Midwest and South below 15.
Costs the simple version ignores
Buyers: HOA fees ($200 to $600 a month in many condos), the mortgage interest deduction (only valuable if itemizing beats the $32,200 joint standard deduction, which in 2026 means a large mortgage and high state taxes), and the risk of a roof or furnace in year two. Renters: renters insurance, the chance of a non-renewal or a large increase at lease end, and in some cities annual increases well above 3%. Both: moving costs and the time cost of a sale.
When buying is the wrong answer even if the math works
A move likely within three years, a job that could relocate you, a down payment that empties the emergency fund, or a payment that only works on two incomes with no margin. The calculator above lets you set the holding period, appreciation, rent growth and investment return; try the pessimistic case before the optimistic one.