Rent vs. Buy Calculator
Details
Details
FAQ
Your questions answered.
Is it better to rent or buy in 2026?
It depends on your hold period, local market, and what you'd do with the down payment. In high-price markets where home prices are elevated relative to rents, the break-even typically takes longer. Use the calculator with your actual numbers — the answer is different for every buyer.
How long do I need to stay for buying to make sense?
Nationally, the break-even typically falls between 5 and 10 years when accounting for closing costs, selling costs, and opportunity cost. The calculator shows your exact break-even year based on your specific inputs.
What is opportunity cost and why does it matter?
It's what your down payment could earn invested in the market rather than used to buy. On a $170,000 down payment at 7% over 10 years, that's approximately $185,000 in gains you forgo by purchasing. Ignoring it overstates the financial case for buying.
What should I use for the appreciation rate?
The Case-Shiller national average is approximately 3.5–4% annually. Coastal and high-growth markets have historically exceeded that; stable or rural markets often come in below. Use a conservative local estimate — appreciation is not guaranteed.— a net loss of $7,380. This is why confirming your timeline before refinancing is as important as confirming the rate.
What does the maintenance reserve cover?
Repairs, replacements, and ongoing upkeep — roof, HVAC, plumbing, appliances, and the unexpected costs of ownership. At 1.25% on an $850,000 home, that's over $10,000/year. It doesn't appear in your mortgage payment and is consistently underestimated.
Buying is not always better than renting. The right answer depends on how long you plan to stay, what your money would earn if invested elsewhere, and what ownership actually costs beyond the mortgage. Enter your numbers to find out.
How to Use This Calculator
Buying
Home price ($) and Down payment ($): Enter the purchase price and your down payment. The percentage calculates automatically.
Interest rate (%) and Loan term (yrs): Enter your quoted rate and preferred term. Default is 30 years.
Property tax (%): Your local annual tax rate as a percentage of home value. Rates vary significantly by state and county — adjust to your market.
HOA (Monthly) ($): Monthly HOA fees. Enter $0 if none apply.
Insurance (Annual) ($): Your annual homeowner's insurance premium.
Maintenance reserve (%): An annual percentage of home value budgeted for repairs and upkeep. 1–1.5% is the standard recommendation — and one of the most underestimated costs of ownership.
Closing Costs (Buy) (%): Upfront purchase costs as a percentage of home price. Typically 2–3%.
Selling Costs (Exit) (%): Cost to sell when you exit — agent commissions, transfer taxes, fees. Typically 5–6%.
Appreciation (%): Estimated annual home value growth. The Case-Shiller long-term national average is approximately 3.5%.
Hold period (yrs): How long you plan to own before selling. This is the single most important variable — the longer you hold, the stronger the case for buying.
Renting
Monthly rent ($) and Annual increase (%): Your current or comparable rent and the rate it grows each year.
Renter's Insurance ($): Your annual renter's insurance premium.
Investment return (%): The annual return on the down payment if invested instead of spent. This is the opportunity cost of buying. 7% reflects the S&P 500's long-term inflation-adjusted average.
Advanced
Three optional toggles, off by default:
Mortgage interest deduction: Applies the federal tax deduction on mortgage interest. Most relevant for high-income buyers with large loan balances who itemize.
Capital gains on sale: Accounts for tax on profit above the $250K/$500K primary residence exclusion. Relevant for long hold periods or high-appreciation markets.
Inflation adjustment: Converts all figures to real (inflation-adjusted) dollars. Most useful for hold periods of 10+ years.
What the Calculator Is Actually Comparing
This is not mortgage vs. rent. The calculator models the true net cost of each path.
Buying (Net of equity) is your cumulative ownership cost minus the equity built through principal paydown and appreciation — what buying actually costs after accounting for the wealth created.
Renting (Net of opportunity gain) is your cumulative rent paid minus the investment gains on your down payment if kept in the market.
The chart plots both lines over time. Where they cross is the break-even year — the point at which buying becomes the better financial choice. Before that crossing, renting wins. After it, buying does.
The Three Output Numbers That Matter
Break-Even Year — when cumulative buying costs fall below renting costs. Short hold periods often favor renting because closing costs and early interest haven't been offset yet. Longer holds almost always favor buying.
Equity at Exit — the value returned to you when you sell, combining principal paydown and appreciation.
Opportunity Cost — what the down payment would have grown to if invested instead. This is the most commonly ignored factor in rent-vs-buy decisions, and it meaningfully affects the verdict.
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