How to compare renting and buying a home
Comparing rent with a mortgage payment misses most of the picture. This calculator compares what you would own at the end of your stay under each choice, so the down payment, closing and selling costs, and the monthly cash difference all count.
How to use it
- Under If you rent, enter your Monthly rent and Annual rent increase.
- Under If you buy, enter the Home price, Down payment, Mortgage rate, taxes, insurance and costs.
- Set Investment return per year and How long you will stay.
How the comparison works
Both sides start with the same cash. The renter invests the down payment plus closing costs, then each month invests whatever owning costs above renting. If renting costs more, the owner invests the gap instead. Both portfolios grow at your investment return, compounded monthly.
At the end, renter net worth is the portfolio. Buyer net worth is the home value, minus selling costs and the remaining loan, plus any savings. PMI is charged until the balance reaches 80% of the price, the point where the CFPB says you can ask to cancel it.
Worked example
With the starting numbers, a $350,000 home with 20% down at 7% costs $2,629.51 a month in year 1 ($1,862.85 mortgage, $350.00 property tax, $125.00 insurance and $291.67 maintenance), against $2,130.00 to rent. After 10 years the renter's portfolio is $214,018 and the buyer's net worth is $201,874, so renting is ahead by $12,144. Buying breaks even in year 14.
Limits and edge cases
- Tax effects are left out. Most owners take the standard deduction, so the mortgage interest deduction often adds nothing, but check your own return.
- Returns and price growth are steady each year. Real markets are not, and a short stay can lose money on either side.
- The loan is a fixed-rate mortgage with no extra payments, and you sell at the end of the stay.
- A 30-year rate near 7% favors renting more than the 3% rates of 2021 did; Freddie Mac's weekly survey has today's average. To test payments, use the mortgage calculator, or see the rental property calculator if you plan to rent the home out.
Frequently asked questions
How long do you need to stay for buying to beat renting?
It depends on rent, price and rates. With the starting numbers, buying breaks even in year 14. Higher rent, faster price growth or a lower rate shorten that, while a short stay usually favors renting.
Is it better to rent or buy in 2026?
With 30-year rates near 7%, buying needs a long stay unless rent is high for the price. With the starting numbers, monthly rent of 0.6% of the price breaks even in year 14, 0.63% in year 9 and 0.7% ($2,450) in year 5. Test your own rent and prices.
What investment return should I use?
Stocks have returned roughly 10% a year before inflation over the long run, so 7% is a cautious planning rate. Use a lower rate if you would keep the savings in bonds or cash.
What are typical closing and selling costs?
Buyers commonly pay 2% to 5% of the price in closing costs, and Fannie Mae puts the average near 3%. Sellers often pay 6% or more once agent fees, transfer taxes and title costs are added. This tool starts at 3% and 6%.
Sources: Freddie Mac Primary Mortgage Market Survey (weekly 30-year average); CFPB, removing PMI; Fannie Mae, closing costs for homebuyers.
Related reading: Rent vs Buy a Home in 2026: The Math