Rent vs. Buy Calculator
Compare the true cost of renting vs. buying a home over time, including equity, taxes, PMI, maintenance, and investment opportunity cost.
🏠 Home Purchase Details
🏢 Renting Details
The 5% Rule (Quick Estimate)
Annual unrecoverable cost of owning ≈ 5% × Home Price. If your annual rent is less than 5% of the home price ÷ 12 per month, renting is likely cheaper.
The 5% breaks down as: ~3% opportunity cost on equity, ~1% property tax, ~1% maintenance.
Housing Market Data (2025–2026)
Key Formulas
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]Breakeven Rent = Home Price × 5% ÷ 12FV = Down Payment × (1 + r)ⁿEquity = Value − Remaining Balance🔒 All calculations happen in your browser — no data is stored or sent
Related Tools
Free Rent vs. Buy Calculator — Should You Rent or Buy a Home?
Should you rent or buy a home? Our free rent vs. buy calculator compares the true total cost of homeownership against renting over your planned time horizon. Unlike simple mortgage calculators, this tool accounts for property taxes, insurance, maintenance, PMI, closing costs, home appreciation, equity buildup, and the investment opportunity cost of your down payment.
Enter a home price and monthly rent to get a comprehensive side-by-side comparison. See which option wins over time, your estimated breakeven year, and detailed monthly and cumulative cost breakdowns. Includes the 5% Rule quick estimate and current 2025–2026 housing market data. All calculations happen in your browser — nothing is stored or sent.
How to use Rent vs. Buy Calculator
- Enter home purchase details — Set the home price, down payment percentage, mortgage rate, and loan term. The defaults reflect current market averages (9% down, 6% rate, 30-year term).
- Set ownership costs — Adjust property tax rate (national average ~1.1%), maintenance (typically 1% of home value/year), and homeowner's insurance. These ongoing costs are often overlooked when comparing to rent.
- Enter renting details — Set your current monthly rent and expected annual rent increase (national average ~3%). The calculator projects rent forward each year.
- Set your time horizon — How long do you plan to stay? The breakeven point for buying is typically 5–7 years. Shorter stays often favor renting due to high transaction costs.
- Compare results — Review the verdict, net cost comparison, monthly payment breakdown, and breakeven analysis. Adjust inputs to model different scenarios.
Features
- True Total Cost Comparison — Accounts for all buying costs (mortgage P&I, property tax, insurance, maintenance, PMI, closing costs) and renting costs (growing rent, renter's insurance) over your full time horizon.
- Equity & Appreciation — Calculates home equity built through principal paydown and home appreciation, subtracted from buying costs for an accurate net comparison.
- Investment Opportunity Cost — Models what your down payment would earn if invested in the market instead of a home. This is the most commonly overlooked factor.
- PMI Calculation — Automatically adds Private Mortgage Insurance (~0.5%/year) when down payment is below 20%, and stops when equity reaches 20%.
- Breakeven Analysis — Shows the estimated year when buying becomes cheaper than renting in cumulative net cost.
- 5% Rule Quick Estimate — Displays the quick breakeven rent calculation: if annual rent is less than 5% of home price ÷ 12, renting is likely cheaper.
Frequently Asked Questions
Is it better to rent or buy a house?
It depends on how long you plan to stay, local market conditions, and your financial situation. Generally, buying favors people staying 5+ years due to high transaction costs (closing costs average 3% + selling costs average 8%). In expensive markets with high price-to-rent ratios, renting and investing the difference often wins. The national homeownership rate is 65.7% (2025).
What is the 5% rule for renting vs buying?
The 5% rule estimates that the annual unrecoverable cost of owning a home is approximately 5% of the home's value: ~3% opportunity cost on equity, ~1% property tax, ~1% maintenance. If your annual rent is less than 5% of the home price, renting is likely the better financial choice. For a $400,000 home, the breakeven monthly rent is about $1,667.
How long do I need to stay for buying to make sense?
The typical breakeven point is 5–7 years, but it varies significantly by market. High closing costs (3% buying + 6–8% selling commission/taxes) make short-term ownership expensive. In rapidly appreciating markets, breakeven may be shorter; in flat or declining markets, it could take 10+ years.
What costs does this calculator include?
For buying: mortgage principal & interest, property taxes, homeowner's insurance, maintenance (1%/year), PMI if applicable, and closing costs (3% buy + 8% sell). Credits home equity and appreciation. For renting: monthly rent with annual increases, renter's insurance (~$20/month), and credits investment returns on the down payment invested in the market.