Deciding whether to rent or buy a home is a major financial decision. Use this calculator to compare the long-term costs and benefits of both options in Your Area. Be sure to plug in current mortgage rates for an accurate comparison.
Compare Renting vs. Buying
Buying Scenario
Renting Scenario
Comparison Period
Summary Over 7 Years
Total Buying Costs
Total Renting Costs
When to Buy vs. Rent
*Chart shows cumulative net cost over time. Lower value is better.
How to Use the Rent vs. Buy Calculator
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Enter the buying scenario
Add the home price you're considering, your planned down payment, the mortgage interest rate, and the loan term. Use the affordability calculator first if you're not sure what price range fits your income.
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Enter the renting scenario
Type in the monthly rent for a comparable property. Be honest about what you'd actually rent — not the cheapest possible apartment, but a place comparable in size and location to the home you'd buy.
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Set the comparison period
Choose how many years you plan to stay. Most rent-vs-buy analyses break even between years 5 and 7. If you're planning to move sooner, the buying scenario almost always loses on a pure cost basis.
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Adjust appreciation and inflation
Conservative defaults: 3% annual home appreciation, 2% annual rent inflation. Adjust based on local conditions in Your Area if you have a sense of the trend.
Should You Rent or Buy?
The right answer depends as much on lifestyle as on math. Buying makes sense for a particular life stage and a particular set of circumstances. Renting makes sense for others. Here's the honest trade-off:
Buying often makes sense when
- You'll stay in the home at least 5 to 7 years
- You have a 20% down payment plus 3 to 6 months of expenses left over
- Your job and income are stable
- You want to build equity instead of paying a landlord's mortgage
- The local rent-to-price ratio favors buying (rents are high relative to home prices)
- You're ready for the responsibility of maintenance, repairs, and property taxes
Renting often makes sense when
- You might move within 5 years for work, family, or lifestyle reasons
- You don't have a 20% down payment yet without depleting savings
- The local rent-to-price ratio favors renting (home prices are inflated)
- You'd rather invest the down payment in stocks (potentially higher returns over decades)
- You want flexibility — not having to deal with maintenance or being able to relocate quickly
- Mortgage rates are very high and you expect them to fall
One frame that helps: if a 1-percentage-point rate drop or a $50,000 home price increase would change your answer, you're on the borderline. Wait, save more, or look at different price points. The biggest financial mistakes in housing come from forcing a decision when the math is marginal.
The Rent vs. Buy Decision in Your Area
Choosing between renting and buying a home in your state involves weighing a complex set of financial and lifestyle factors. While buying often builds equity, it also comes with significant upfront costs and ongoing responsibilities.
What are the hidden costs of buying a home?
Beyond your mortgage, taxes, and insurance, homeownership includes maintenance (budget 1% to 2% of home value per year), potential HOA fees, closing costs (often 2% to 5% of the loan amount), and property appreciation risk. These can significantly impact your total cost of ownership.
Is renting just throwing money away?
Not necessarily. Renting offers flexibility, predictable monthly costs, and no responsibility for maintenance. The money saved on a down payment and maintenance can be invested. If you invest a $60,000 down payment for 30 years at 8%, it grows to roughly $600,000 — potentially competitive with home equity built over the same period, depending on the market.
How long should I plan to live in a home to make buying worthwhile?
Generally, it takes at least 5 to 7 years for buying to be more financially advantageous than renting, primarily due to high upfront closing costs. This breakeven point can vary significantly based on your local market in Your Area. In high-cost areas, the breakeven can stretch to 8 to 10 years.
How much should I budget for home maintenance?
The standard rule of thumb is 1% to 2% of the home's value per year. On a $400,000 home, that's $4,000 to $8,000 annually for repairs, replacements, and routine maintenance. Older homes and homes with more square footage tend toward the higher end. Budget this as a fixed monthly cost ($333 to $667 per month) so it's not a surprise.
What's the price-to-rent ratio and how do I use it?
Divide a home's purchase price by 12 months of rent for a comparable property. A ratio under 15 generally favors buying; 15 to 20 is borderline; above 20 generally favors renting. If a $400,000 home would rent for $2,500/month, the ratio is 13.3 ($400,000 / $30,000) — buying-favorable. The same home renting for $1,500/month gives a ratio of 22.2 — rent-favorable.
What if I have less than 20% for a down payment?
You can still buy with as little as 3% to 5% down on a conventional loan, or 3.5% on an FHA loan. The trade-off is private mortgage insurance (PMI), which adds 0.3% to 1.5% of the loan amount per year to your payment until you reach 20% equity. Run the numbers both ways — sometimes waiting another year to save more is cheaper than paying PMI for several years.
Does the calculator account for tax benefits?
Mortgage interest and property taxes are deductible only if you itemize deductions on your federal taxes. Since the 2017 tax law nearly doubled the standard deduction, most homeowners no longer benefit from itemizing — only roughly 10% of taxpayers itemize today, mostly higher-income households in high-tax states. If you'll take the standard deduction, the "tax benefit of homeownership" is essentially zero in your math.
