Rent vs. Buy Calculator
Adjust the inputs below to match your situation and see a detailed, personalized comparison of your net worth over time.
How this works
Balances and investments compound at the nominal annual return you enter (default 7%) — this calculator does not deflate for inflation. Recurring costs (home insurance, HOA fees) escalate using the inflation input (default 2.5%), while home price, rent, and income use their own separate growth-rate inputs. Every dollar figure reported is a future, nominal dollar amount, not today's purchasing power — unlike the FI-focused calculators elsewhere in this suite.
Each month, the model compares total cash outflow between renting and owning; whichever scenario costs less that month has the difference invested, so the two paths are always apples-to-apples on cash committed.
The homeownership tax benefit is computed year by year against a comparable renter who invests the same cash instead.
Key assumptions
- PMI applies whenever the loan-to-value ratio exceeds 80% (down payment under 20%), at a default 0.5%/yr rate on the original loan amount, dropping off once the balance falls to 80% of the purchase price.
- The tax model is itemization-aware for 2026 (OBBBA-era figures): standard deduction $16,100 single / $32,200 married filing jointly, a $40,400 SALT cap (shared between estimated state/local income tax and property tax), and a $750,000 mortgage-interest debt cap. Only the federal marginal rate is applied to the incremental itemized deduction.
- Tax inputs are marginal rates, not a single all-in effective rate: federal (default 24%), state (default 5%), and local (default 0%) — feeding the itemized-deduction model above.
What this leaves out
- Sequence-of-returns risk — growth is a constant rate, not a real market path.
- Fees — expense ratios and advisory fees are not deducted from the return.
- The SALT cap's income-based phase-down above $505,000 MAGI (2026) is not modeled — the cap applies flat regardless of income.
- All 2026 tax constants (standard deduction, SALT cap, mortgage-interest cap) are frozen for the full 30-year projection, even though the SALT cap is scheduled to revert to $10,000 in 2030 under current law.
- Home price appreciation and rent growth are modeled as constant annual rates, not a real market path.
Related calculators
A worked example: a $500,000 home against $2,500 rent over seven years
Buying a $500,000 home with 20% down at 6.5% over 30 years, against renting a comparable place for $2,500 a month. Home prices grow 4% a year, rent rises 3%, investments return 7%, and the household stays seven years before selling. On the ownership side the modeled monthly cost is $4,146.57 — $2,528.27 of principal and interest, $500 of property tax, $125 of insurance, $416.67 of maintenance, $350 of utilities and $300 of transportation, less $73.37 of monthly tax benefit. Renting the same lifestyle costs $2,791.67 a month all in.
The renter is $1,354.90 a month cheaper, and the model invests that difference rather than letting it vanish — which is what makes the comparison honest. After seven years the owner's position is $242,093: a home worth $657,966, less a $361,665 loan balance and $46,058 of selling costs. The renter's invested balance is $321,958.
Renting comes out ahead by $79,865, and the calculator reports no breakeven year within the seven-year horizon — on these inputs, buying does not catch up before the sale. The reason is visible in the monthly breakdown: the gap between the two housing costs is large, and seven years is not long enough for equity and 4% appreciation to overcome seven years of compounding on $1,354.90 a month plus the $100,000 down payment that was never tied up. Change the stay duration, the rent, or the price growth and the answer can flip — which is the point of running it on your own numbers rather than trusting a rule of thumb.
Frequently asked questions
Is renting really throwing money away?
No, and the framing hides the real comparison. Rent buys housing for a period; it builds no equity, which is true and incomplete. Ownership also spends money that builds no equity — mortgage interest, property tax, insurance, maintenance, and the transaction costs on both ends. In the example above, first-year interest alone is about $25,900, and selling costs $46,058. The honest question is not equity versus no equity but total cost versus total cost, with the cash difference invested either way. That is what this calculator computes.
Why does the model invest the monthly difference?
Because without it the comparison is rigged. Whichever option costs less that month frees up cash, and a comparison that lets the renter's savings evaporate while carefully tracking the owner's equity will favor buying every time. Here the renter invests $1,354.90 a month plus the $100,000 that would have gone to a down payment, which is why their balance reaches $321,958. If you would not actually invest the difference, the model overstates renting — but the fix is to change your behavior, not the assumption.
Does the mortgage interest deduction still help after the 2025 tax law?
Much less than most buyers expect, and this model is itemization-aware rather than applying a flat percentage to interest. Under the One Big Beautiful Bill Act (Pub. L. 119-21), the 2026 standard deduction is $16,100 single and $32,200 married filing jointly, and only the portion of itemized deductions above that produces any benefit. The SALT cap is $40,400 for 2026, shared between estimated state and local income tax and property tax, so property tax is often crowded out. The $750,000 mortgage-interest debt cap was made permanent. The result in the example is a tax benefit of $73.37 a month — real, but nowhere near the 24% of interest a naive calculation would claim. Note the cap reverts to $10,000 in 2030 under current law, and this model holds it flat, which flatters the later years.
How long do I need to stay for buying to win?
There is no universal number, which is why the calculator reports a breakeven year for your inputs rather than repeating the usual five-year rule. On the defaults above there is no breakeven inside seven years. Breakeven is driven mostly by the gap between monthly costs, the price growth rate, and the roughly 10% of value consumed by buying and selling costs combined — 3% going in and 7% coming out. Longer stays help because they spread those transaction costs and give appreciation time to work.
Are these figures in today's dollars?
No — unlike the FI calculators on this site, Rent vs. Buy reports nominal future dollars. Home price, rent and income each grow at their own input rates, recurring costs like insurance escalate with inflation, and investments compound at the nominal return. The $657,966 home value is a future dollar figure, not today's purchasing power. This is deliberate: a mortgage payment is fixed in nominal terms, so modeling the whole comparison nominally keeps it internally consistent.
What about the parts that are not financial?
They are frequently decisive and the model cannot price them. Owning offers stability, control and protection from rent increases; renting offers mobility, no exposure to maintenance surprises, and no concentrated bet on one property in one local market. The calculator includes lifestyle sliders precisely because a $79,865 financial gap can reasonably lose to a strong preference — but you should know the size of what you are trading away before you trade it.
Sources
- Revenue Procedure 2025-32
Internal Revenue Service — checked 2026-08-12
Source of the 2026 standard deduction, SALT cap, and mortgage-interest debt cap figures used in the tax model. §.14 gives the 2026 standard deduction as $16,100 (single/MFS), $32,200 (MFJ), and $24,150 (HoH).
- Publication 936: Home Mortgage Interest Deduction
Internal Revenue Service — checked 2026-08-12
Pub. 936 prescribes the AVERAGE mortgage balance for the qualified-loan-limit calculation. This site uses the START-OF-YEAR balance instead (see docs/methodology.md, 'Known simplifications') — a documented, conservative deviation, cited here precisely because we diverge from it, not because we comply with it.
- One Big Beautiful Bill Act, Pub. L. 119-21
U.S. Congress — checked 2026-08-12
Statutory basis for the 2026 tax constants (standard deduction indexing, SALT cap, mortgage-interest debt cap).
*The calculations provided are for illustrative purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any decisions.