Rent vs Buy Calculator: Is Buying Worth It in Your State? (2026)
Rent vs buy calculator that compares net worth instead of monthly payments. Enter your rent, home price, and how long you will stay to get the exact year buying pulls ahead — including closing costs, selling costs, PMI, and what your down payment could earn invested. Pick your state first and we load its median home price, effective property tax rate and typical closing costs from the same data our state pages use.
How to Use This Calculator
Adjust the buy-side and rent-side parameters to match your situation, then set the return the renter would earn on the cash they keep. The chart updates automatically with two net worth curves: the first year the buying curve rises above the renting curve is your breakeven year.
- 1Set the Buy-Side Parameters — Enter the home price, down payment, interest rate, property tax, and maintenance assumptions for the purchase. Closing costs, selling costs, and the PMI rate are configurable too — they are what usually decide short holds.
- 2Set the Rent-Side Parameters — Enter your current monthly rent and expected annual rent increase. Rents typically rise 2-4% per year, and this single input moves the breakeven year more than any other.
- 3Adjust Investment Return — Set the expected annual return on the money you keep invested if you do not buy — the down payment plus closing costs, and any month you spend less than you would owning. Default is 5%.
- 4Read Your Breakeven Year — The chart plots net worth: the blue line is buying, the orange line is renting. The first year the blue line sits above the orange line is your breakeven year, shown at the top of your results. If the lines never cross, renting wins over 30 years.
📊 Example: $400,000 Home vs $2,400/Month Rent
Calculator defaults: buy a $400,000 home with 20% down ($80,000) at 6.5% on a 30-year fixed, or keep renting at $2,400/month. Assumes 3.5% annual appreciation, 3% rent increases, 1.2% property taxes, 1% maintenance, 3% closing costs, 6% selling costs, and a 5% return on the cash a renter keeps invested.
| Buy: P&I + Taxes + Maintenance | $2,756/mo |
| Rent: Monthly Rent (rising 3%/yr) | $2,400/mo |
| Cash to Close (20% down + 3% closing) | $92,000 |
| Selling Costs When You Exit (6%) | $24,000 |
| Breakeven Year | Year 4 |
| Net Worth After 10 Years (Buy) | $262,072 |
| Net Worth After 10 Years (Rent) | $171,601 |
Breakeven lands in year 4, and the margin is thin — the buyer is only $834 ahead at that point. Change one input and it moves fast: at $1,800/month rent the crossover slips to year 15, and at $2,000/month it takes 8 years. That sensitivity is the real lesson — what decides this is your rent relative to the home price, plus how long you stay.
Understanding Your Results
This calculator compares net worth rather than spending, so the labels are worth a minute of your time:
Common Mistakes to Avoid
The rent vs buy decision is often clouded by emotion and common misconceptions. Watch out for these:
❌ Assuming buying is always better because renting is throwing money away.
✅ A $400,000 home with 20% down at 6.5% costs about $2,756 a month to own — principal, interest, taxes, and maintenance. Only about $290 of the first payment goes to principal; the rest is interest, taxes, and upkeep, money you never see again. Renting is not a bad deal if you stay fewer than four years — that is where the default breakeven lands.
❌ Ignoring maintenance and repair costs in the buying scenario.
✅ Ownership carries 1% to 2% of home value a year in maintenance — $4,000 to $8,000 on a $400,000 home for the roof, the HVAC, plumbing, and general upkeep. Renters pay none of it. This calculator charges 1% by default, which is already about $333 a month.
❌ Not thinking about lifestyle flexibility when making the decision.
✅ Renting buys the freedom to move for a job, a relationship, or a lifestyle change without paying roughly 6% of the sale price in commissions. If your career is unstable or you might relocate within a few years, that flexibility has real financial value the breakeven year cannot see.
❌ Comparing the monthly mortgage payment to the monthly rent.
✅ The payment is not the breakeven. On the defaults a buyer spends $356 a month more than a renter in year one, yet buying still pulls ahead by year 4 — because rent climbs 3% a year while a fixed mortgage payment does not, and part of every payment converts into equity.
❌ Assuming a 20% down payment when you plan to put down 5%.
✅ At 5% down the loan is $380,000 and PMI runs about 0.85% a year — roughly $3,230 a year, or $269 a month — which pushes breakeven from year 4 to year 7. Check the down-payment table below or run the PMI calculator before you assume 20%.
How the Breakeven Year Is Calculated
Most rent vs buy tools add up what you pay — rent on one side, mortgage payments on the other — and call the crossing point "breakeven." That misses the two biggest items in the decision: the equity you build by owning, and the investment growth you give up on the cash you sink into a purchase. So this calculator compares net worth instead of spending.
Buyer net worth = Home value − Loan balance − Selling costs + side portfolio
Renter net worth = Side portfolio
The side portfolio is what makes the model rent sensitive. The renter starts with the exact cash a buyer would sink at closing — the down payment plus closing costs — invested at the return you enter (5% by default). Every month, whichever path costs less invests the difference. When rent is cheap, the renter's portfolio compounds faster than the owner builds equity, and buying can take a decade or more to catch up. When rent is expensive, the owner pulls ahead within a few years.
The Default Scenario, Line by Line
Here is every input the calculator starts with, so you can reproduce the result before you change a single slider:
| Home price | $400,000 |
| Down payment (20%) | $80,000 |
| Loan at 6.5%, 30-year fixed | $320,000 |
| Principal & interest | $2,023/mo |
| Property tax (1.2%) + maintenance (1%) | $733/mo |
| Total cost of owning, year one | $2,756/mo |
| Rent (rising 3% per year) | $2,400/mo |
| Cash to close (20% down + 3% closing) | $92,000 |
| Selling costs when you exit (6%) | $24,000 on a $400,000 sale |
| Breakeven year | Year 4 |
Notice the shape of the trade. Owning costs $356 more than renting in month one, but rent rises 3% a year while a fixed-rate mortgage payment does not. By year four the owner's growing equity and frozen payment overtake the renter's portfolio — and if rent starts at $2,000 instead of $2,400, the very same home takes until year eight to break even.
Net Worth by Holding Period
This is the table the breakeven year is read from. Buyer net worth nets home value against the remaining mortgage and a 6% selling cost; renter net worth is the invested portfolio. The winner flips in year four and never flips back:
| Hold Period | Buyer Net Worth | Renter Net Worth | Who's Ahead |
|---|---|---|---|
| 1 year | $72,737 | $100,820 | Rent by $28,083 |
| 3 years | $108,343 | $118,065 | Rent by $9,722 |
| 4 years | $127,278 | $126,444 | Buy by $834 — breakeven |
| 5 years | $147,015 | $134,627 | Buy by $12,388 |
| 7 years | $189,045 | $150,297 | Buy by $38,748 |
| 10 years | $262,072 | $171,601 | Buy by $90,471 |
| 15 years | $422,996 | $198,783 | Buy by $224,213 |
| 20 years | $647,038 | $210,514 | Buy by $436,524 |
| 30 years | $1,374,530 | $154,372 | Buy by $1,220,158 |
Two things stand out. First, the advantage keeps widening instead of plateauing, because a fixed mortgage payment gets cheaper in real terms every year rent rises. Second, the margin at the breakeven point is razor thin — $834 after four years — so rent, rates, and especially how long you stay are what really decide the answer. By year ten the buyer is ahead by $90,471, and by year thirty by roughly $1.2 million.
The 5% Rule, Checked Against the Model
The classic shortcut says buying beats renting once annual rent exceeds 5% of the purchase price — property taxes, maintenance, and the cost of capital, all in one number. On a $400,000 home that line sits at $1,667 a month:
5% rule rent = $400,000 × 0.05 ÷ 12 = $1,667/mo
Run $1,667 through this calculator and buying edges ahead in year 28; drop rent to $1,600 and it never breaks even. So on this house the 5% rule is almost exactly the indifference point for someone who stays 30 years — a useful sanity check, but not a green light for a shorter hold. For a ten-year stay you need rent near $2,000 to break even by year eight:
| Monthly Rent | Rent as % of Price | Breakeven Year |
|---|---|---|
| $1,500 | 0.38%/mo | Never |
| $1,667 | 0.42%/mo | 28 |
| $1,800 | 0.45%/mo | 15 |
| $2,000 | 0.50%/mo | 8 |
| $2,400 | 0.60%/mo | 4 |
| $3,000 | 0.75%/mo | 2 |
Why Transaction Costs Decide Short Holds
Two payments never show up in a monthly payment comparison, and together they are the single biggest reason short-term buying loses. On the default scenario the buyer sinks $12,000 in closing costs at the start and $24,000 in selling costs on the way out — about $36,000 that buys no equity at all. Strip those costs out of the model and the answer changes completely:
| Assumption | Breakeven Year |
|---|---|
| Default: 3% closing + 6% selling | 4 |
| If selling were free (closing only) | 2 |
| If closing were free (selling only) | 3 |
| If both were free (unrealistic) | 1 |
Selling costs are the heavier of the two, which is why a 6% commission is a real consideration rather than a formality — a flat-fee or lower-commission sale shortens the breakeven period directly. Put another way: if you might move within three years, the model says rent, because the $24,000 exit cost alone eats roughly a year of equity growth.
Down Payment and PMI: The Hidden Cost of Buying Sooner
A smaller down payment gets you into a house sooner, but it raises the loan balance, adds mortgage insurance, and weakens the buying case because more of each payment goes to PMI and interest instead of equity. Holding every other default constant:
| Down | Loan | PMI | Total PMI | Breakeven |
|---|---|---|---|---|
| 5% | $380,000 | $269/mo | $33,108 | 7 yrs |
| 10% | $360,000 | $255/mo | $23,970 | 7 yrs |
| 15% | $340,000 | $241/mo | $13,246 | 6 yrs |
| 20% | $320,000 | $0 | $0 | 4 yrs |
PMI here is priced at 0.85% of the loan per year and charged while the balance is above 80% of the original price. Notice how much sooner it ends at 15% down than at 5% down — $13,246 versus $33,108 — because appreciation and principal paydown clear the 80% threshold faster when you start closer to it. Buying at 5% down pushes breakeven from year four to year seven, and the ten-year net worth gap versus 20% down is $53,836. Run your own loan amount through the PMI calculator to see the monthly cost and cancellation date for your scenario, where you can also cancel at 80% of the home's current value rather than the original price used here. Or use the mortgage calculator to compare how a different down payment changes your payment.
When Renting Actually Wins
The buying case in the defaults is strong — rent at $2,400 is 0.60% of the price every month, well above the 0.42% you need just to break even over 30 years on this house. But the answer is fragile in both directions, and the assumptions most likely to flip it are the ones buyers usually leave at their most optimistic setting: appreciation and investment return.
| If You Change This | Breakeven Year |
|---|---|
| Home appreciation 5% instead of 3.5% | 3 |
| Home appreciation stays at 0% | 13 |
| Rent never rises instead of +3%/yr | 5 |
| Renter invests at 7% instead of 5% | 6 |
| Renter invests a cautious 3% | 4 |
| 0% appreciation and rent of $1,500 | Never |
| $2,000 rent with only 5% down | 16 |
So renting wins outright when rent is cheap relative to the price, when you will not stay five years or more, when appreciation lags inflation, and when the down payment can be invested at a decent return. Notice the middle row: a flat rent schedule is a milder problem than a flat home price, because a fixed mortgage payment still gets cheaper relative to a rising rent. That is the trade in one sentence — buying is a bet on time, on staying put, and on the home's value keeping pace.
Want the narrative version — how these numbers play out for a real household deciding right now?
Read Rent vs Buy in 2026: The Math Most People Get Wrong for the story behind the breakeven year. If the down payment is the sticking point, start with Closing Costs Explained and How Is PMI Calculated? — the two costs that decide whether a short hold works. Then check what you can actually afford with the affordability calculator and the closing cost calculator.
Related Tools & Guides
Dive deeper into the numbers with these related resources: