Rent vs Buy Calculator — Should I Rent or Buy a Home? (2026)

Most people compare rent to a mortgage payment — but that misses the full picture. Here's what each option actually costs over 5 years.

**Renting: monthly rent + renter's insurance + rent increases.** Your landlord pays for property taxes, maintenance, and insurance — but those costs are built into your rent. Rents typically increase 3-5% annually. Over 5 years, a $2,000/month rent becomes $2,320/month at 3% annual increases — a total of $127,000 in rent payments with zero equity built.

**Buying: mortgage + taxes + insurance + maintenance + closing costs.** A $350,000 home with 20% down at 6.5% costs approximately $2,500/month (PITI). Add 1% annually for maintenance ($3,500/year) and you're at $2,800/month total. But $700/month goes to principal — that's $42,000 in equity built over 5 years.

**The hidden costs of buying.** Closing costs ($10,000-$20,000 at purchase), property maintenance and repairs ($3,000-$7,000/year), and selling costs (5-6% of sale price) are often overlooked. A $350,000 home costs approximately $18,000-$21,000 to sell.

**The hidden costs of renting.** Annual rent increases compound. No tax deductions. No equity building. No ability to renovate or improve the space. Moving costs every 1-3 years ($1,000-$5,000).

The rent-vs-buy decision depends on five personal factors. There's no universal right answer.

**Buying wins when:** You plan to stay 5+ years (break-even on closing costs), you have 10-20% for a down payment, your total housing cost is under 28% of income, you want to build equity, and your local market appreciates 2-4% annually. See our home affordability calculator to check if your income supports buying.

**Renting wins when:** You plan to move within 3 years (closing costs eat your equity), you need flexibility for job changes, the price-to-rent ratio exceeds 20 (buy price / annual rent), you'd rather invest the down payment in the stock market (historically 7-10% returns vs 3-4% home appreciation), or maintenance responsibilities would be burdensome.

**The breakeven point.** In most markets, the breakeven point where buying becomes cheaper than renting is 3-5 years. This calculator shows you the exact breakeven year for your specific numbers. Below that timeframe, renting is almost always cheaper.

**Interest rates matter enormously.** At 4% rates, buying is favorable in most markets. At 7%+, the math shifts strongly toward renting in expensive markets. Every 1% rate increase adds roughly $200/month to a $300,000 mortgage.

Learn more about how we model these financial scenarios using data from Freddie Mac, the Federal Reserve, and the Bureau of Labor Statistics.

These frameworks help you decide — and save money whichever you choose.

**Use the 5-year rule.** If you'll stay fewer than 5 years, rent. Closing costs ($10,000-$20,000) and selling costs (5-6%) make short-term ownership expensive. The calculator shows your exact breakeven.

**Calculate the price-to-rent ratio.** Divide the home purchase price by the annual rent for a comparable home. Below 15: buying is favorable. 15-20: close, depends on your situation. Above 20: renting is likely better financially.

**Don't forget opportunity cost.** A $70,000 down payment invested in an index fund at 8% grows to $103,000 in 5 years. That's $33,000 in gains you forgo by putting it into a house. The calculator accounts for this.

**Factor in tax benefits.** Mortgage interest and property tax deductions reduce the effective cost of ownership. But since the 2018 standard deduction increase ($29,200 for married couples), fewer homeowners benefit from itemizing. Only count the tax benefit if you'd itemize regardless. Learn more about how we model these calculations.