Rent vs Buy Calculator

A rent vs. buy calculator answers one of the biggest financial decisions most Americans face: is it cheaper to keep renting, or is it time to buy a home? The answer depends entirely on your specific numbers — your local rent, the home price in your market, your down payment, your mortgage rate, and how long you plan to stay. Our free calculator above runs a complete year-by-year comparison and shows you the exact break-even point where buying becomes the lower-cost option.

In 2026, with mortgage rates in the mid-6% range and home prices still elevated in most US markets, the rent vs. buy decision is more nuanced than ever. Use the calculator above now — enter your monthly rent, a realistic home purchase price, your down payment, and your planned years of stay to see whether renting or buying wins for your situation.

How to Use This Rent vs. Buy Calculator

The calculator has four input sections. Start with the two main panels: enter your current monthly rent in the Renting panel, and your target home purchase price, down payment, mortgage rate, and loan term in the Buying panel. The down payment percentage updates automatically as you type.

In the Location section, select your state to auto-fill the median property tax rate — you can edit this if you know your county’s actual rate. The Insurance section defaults to 0.64% annual homeowners insurance (the national average based on NerdWallet’s 2026 data) and 0.5% PMI, which applies automatically if your down payment is under 20%. The Financial section lets you set the expected return on your invested down payment and an inflation rate.

Click Compare Renting vs. Buying to see your results. The verdict card tells you which option is cheaper at your chosen time horizon. Drag the year slider (1–30) to see how the comparison shifts over time — this is where the break-even year becomes visible. The line chart shows cumulative costs for both options across all 30 years, and the donut chart breaks down where your buying costs go.

Open Advanced Buying Options to customize closing costs (default 3%), HOA fees, annual maintenance (default 1% of home value), selling costs (default 6%), and home appreciation rate (default 3%/yr). These advanced inputs significantly affect the break-even calculation — a higher appreciation rate favors buying, while higher closing and selling costs push the break-even point later.

The True Cost of Renting vs. Buying in 2026

Most people compare rent to a mortgage payment and stop there. That dramatically undersells the true cost of buying. The full cost of homeownership includes the mortgage principal and interest, property taxes, homeowners insurance, private mortgage insurance (if down payment is under 20%), HOA fees, and ongoing maintenance — typically 1% of home value per year. It also includes the opportunity cost of the down payment: money tied up in a home is money not invested elsewhere.

The table below shows the estimated true monthly cost of buying a $400,000 home in 2026 with a 10% down payment ($40,000), 6.5% mortgage rate, and median US property tax of 1.2%:

On the same $400,000 home, a renter paying $2,000/month pays $1,371 less per month in direct costs. But the renter builds zero equity and foregoes home appreciation. This is why the break-even analysis matters — at some point, the equity and appreciation on the bought home offset the higher ongoing costs.

How the Break-Even Year Works

The break-even year is the point at which the cumulative cost of buying drops below the cumulative cost of renting. Before that year, renting is the financially cheaper option. After it, buying has been the better financial decision — assuming you stay in the home.

The break-even year is heavily influenced by five factors:

How long you stay: Buying involves large upfront costs (down payment, closing costs averaging 3% of the purchase price) that take years to recoup. If you move before the break-even year, you lose money on the purchase.

Home appreciation rate: In markets with strong appreciation (4–5%/yr), equity builds faster and the break-even year arrives sooner. In flat markets (0–1%/yr), it can take 15–20+ years for buying to pencil out.

Rent growth rate: When rent rises faster than inflation (common in high-demand cities), renting becomes increasingly expensive over time. A 4–5% annual rent increase dramatically shortens the break-even year compared to 2–3%.

Mortgage rate: Higher rates mean higher monthly P+I payments, which push the break-even year later. At 6.5% vs 4.0%, the break-even year on the same home can shift by 5–8 years.

Property taxes: States like New Jersey (2.23%) and Illinois (2.07%) have property tax rates that add $700–$900/month to the true cost of a $400,000 home, significantly delaying the break-even point compared to low-tax states like Hawaii (0.32%) or Alabama (0.41%).

Renting vs. Buying by State: Property Tax Impact

Property taxes are one of the largest variables in the rent vs. buy calculation, yet most people underestimate them. The same $400,000 home costs dramatically different amounts to own depending on the state:

Select your state in the calculator above — the property tax rate auto-fills with the 2026 Tax Foundation median effective rate for your state. You can override it with your county’s actual rate for a more precise comparison.

When Does Renting Make More Financial Sense?

Buying is not always the right answer. Renting is genuinely the better financial choice in several common situations.

You plan to move within 3–5 years. Closing costs (typically 2–4% of purchase price) and selling costs (typically 5–6%) mean you need significant time and appreciation just to break even. On a $400,000 home, you pay approximately $12,000 in closing costs to buy and $24,000 in agent fees to sell — a combined $36,000 in transaction costs before you count a single mortgage payment.

Your local price-to-rent ratio is very high. Divide the home purchase price by annual rent. A ratio above 20 generally favors renting; below 15 generally favors buying. In markets like San Francisco or Manhattan, ratios of 30–40 make renting the financially dominant choice for most holding periods. Use the calculator to find the break-even year in your specific market.

Your down payment would deplete your emergency fund. If buying requires using emergency savings, the financial risk of homeownership (surprise repairs, job loss) outweighs the equity benefit. Keep at least 3–6 months of expenses liquid after the down payment. Use our Emergency Fund Calculator to verify you have enough cushion before buying.

High-interest debt is outstanding. Carrying credit card debt at 20%+ APR while making a 6.5% mortgage decision is mathematically backwards. Pay down high-interest debt first. Use our Debt Payoff Calculator to model the timeline.

When Does Buying Make More Financial Sense?

You plan to stay 7+ years. In most US markets at 2026 rates, the break-even point falls between 6 and 12 years for buyers with 10–20% down payments. If you are confident you will stay beyond the break-even year, buying builds equity and locks in your housing costs against inflation.

Rent is rising faster than inflation in your market. When local rent growth runs at 4–5% per year, the cumulative cost of renting accelerates sharply over a decade. Buying locks in your principal and interest payment (on a fixed-rate mortgage) for the full loan term.

You have a 20% down payment. Eliminating PMI ($100–$200/month on a $400,000 home) meaningfully improves the rent vs. buy math. At 20% down, the true monthly cost of ownership drops by $1,200–$2,400 per year.

You want to build long-term wealth. Homeownership is a forced savings mechanism. Every mortgage payment builds equity. Over 30 years at 3% annual appreciation, a $400,000 home grows to approximately $972,000. Renters who invest the cost difference can match this — but most don’t. Use our Savings Goal Calculator to model whether disciplined investing can beat home equity growth.

Frequently Asked Questions

Is it cheaper to rent or buy in 2026?

It depends entirely on your local market, how long you plan to stay, and your down payment. In most US markets at 2026 mortgage rates (mid-6%), renting is cheaper in the short term (under 5–7 years) and buying becomes cheaper over longer horizons. Use the rent vs. buy calculator above with your actual numbers — national averages are not meaningful for an individual decision.

What is the break-even point in rent vs. buy?

The break-even point is the year at which the cumulative cost of buying drops below the cumulative cost of renting. Before this point, renting has been cheaper. After it, buying has been the better financial decision. The break-even year varies enormously by market, down payment, mortgage rate, and rent growth rate. The calculator above calculates it precisely for your inputs and shows it on the line chart.

How much down payment do I need to buy a home in 2026?

The minimum depends on loan type. Conventional loans allow as little as 3% down, FHA loans require 3.5% (with a 580+ credit score), VA loans require 0% for eligible veterans, and USDA loans require 0% in qualifying rural areas. However, putting less than 20% down triggers PMI, which adds $100–$200/month on a $400,000 home. Use our Home Affordability Calculator to find the purchase price you can afford at different down payment levels.

Does the calculator account for tax benefits of homeownership?

The calculator does not include mortgage interest deduction or property tax deduction. These tax benefits vary significantly by taxpayer — only about 10% of filers itemize deductions since the 2017 tax law raised the standard deduction. The OBBBA (signed July 2025) raised the SALT deduction cap to $40,000 for 2026, which may make itemizing more beneficial for homeowners in high-tax states. Consult a tax professional to determine whether these deductions apply to your situation.

What is a good price-to-rent ratio?

Divide the home purchase price by annual rent for a comparable property. A ratio below 15 generally favors buying. A ratio of 15–20 is a gray zone where it depends on your time horizon. A ratio above 20 generally favors renting. For example: a $400,000 home vs. $2,000/month rent = $24,000 annual rent → ratio of 16.7, which is a borderline case where the break-even year falls around 8–12 years depending on appreciation and rate assumptions.

How does the mortgage rate affect the rent vs. buy decision?

Significantly. Every 1% increase in mortgage rate on a $360,000 loan adds approximately $230/month to the P+I payment. Going from a 5% to a 6.5% rate on that loan adds about $345/month — $4,140 per year — which pushes the break-even year back by roughly 2–4 years. Use the mortgage rate field in the calculator to model how rate changes affect your specific comparison.

What closing costs should I budget for when buying?

Closing costs typically range from 2% to 5% of the purchase price. On a $400,000 home that is $8,000 to $20,000. The default in this calculator is 3%, which is a reasonable midpoint. Costs include lender fees (origination, underwriting), title insurance, prepaid interest, escrow setup, and government recording fees. Ask your lender for a Loan Estimate — it itemizes all closing costs within three business days of application.

Should I use my investments for a down payment?

Only if doing so leaves you with sufficient emergency savings and you are confident in your time horizon. Liquidating investments for a down payment means missing future investment returns on that capital — this is the opportunity cost the calculator accounts for under Investment Return. If your investments earn 6–8% annually, that opportunity cost is real and substantial over 10–20 years. The calculator compares both paths simultaneously so you can see the full picture.

Related Calculators

• Home Affordability Calculator — Find out how much house you can afford based on your income, debts, and down payment.
• Mortgage Calculator — Calculate your monthly mortgage payment with amortization schedule.
• Emergency Fund Calculator — Verify you have enough liquid savings before committing to a down payment.
• Savings Goal Calculator — Plan how long it takes to save your target down payment amount.
• Debt Payoff Calculator — Model paying off high-interest debt before buying a home.