The most detailed rent vs buy calculator online. 20+ variables including opportunity cost, tax benefits, appreciation, and your actual break-even year.
Enter your numbers for a side-by-side comparison with break-even analysis
🏠 Buying Scenario
🏢 Renting Scenario
📈 Financial Assumptions
7 years
The Verdict
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Total Cost of Buying
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over 7 years
Total Cost of Renting
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over 7 years
Break-Even Year
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when buying becomes cheaper
Net Wealth Difference
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📊 Monthly Cost Comparison
📅 Year-by-Year Breakdown
Year
Buy Monthly
Rent Monthly
Home Equity
Renter Savings
Buy Wins By
The 5% Rule: A Quick Test
Before running the full calculator, there's a quick rule of thumb. Take the home's value, multiply by 5%, and divide by 12. If your monthly rent is less than that number, renting is likely the smarter financial choice.
The Formula
Breakeven Rent = Home Price × 5% ÷ 12
Example: $400,000 home → $400,000 × 0.05 ÷ 12 = $1,667/month
If comparable rentals cost less than $1,667/month, renting may be better.
The 5% accounts for three "unrecoverable" costs of ownership that renters avoid: property taxes (~1%), maintenance (~1%), and the cost of capital tied up in your home (~3%). This rule was popularized by Ben Felix, a portfolio manager, and has become widely cited in personal finance circles.
However, it has limitations — it doesn't account for home appreciation, tax benefits, or forced savings (building equity). The full calculator above handles all of these.
Hidden Costs of Homeownership People Forget
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Maintenance: 1-2% of Home Value/Year
A $400K home costs $4,000-$8,000/year in maintenance. Roofs, HVAC, water heaters, appliances — something always needs fixing or replacing. This is one of the biggest costs new homeowners underestimate.
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Property Tax Increases
Your property taxes can jump after reassessment, sometimes 20-40% in a single year. Some states cap annual increases (California's Prop 13), but many don't.
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Insurance Rate Hikes
Homeowners insurance has increased 20-30% in many states since 2023 due to climate events. Some areas (Florida, California, Louisiana) have seen 50%+ increases or carriers leaving entirely.
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Opportunity Cost of Down Payment
An $80K down payment invested in the S&P 500 at 7% annual returns would grow to ~$130K in 7 years. That's $50K in potential gains you're forgoing by locking money in a house.
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Selling Costs: 6-10% of Sale Price
When you sell, agent commissions eat 5-6%, plus transfer taxes, staging, and repairs. On a $450K sale, that's $27K-$45K going to the transaction, not your pocket.
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Time & Hassle Cost
Mowing, repairs, managing contractors, snow removal — homeowners spend 3-5 hours/week on average on home maintenance. That's time you could spend earning money or enjoying life.
Frequently Asked Questions
Is it cheaper to rent or buy in 2026? ▼
At current mortgage rates (~6.5%), buying takes longer to break even than it did when rates were 3%. In most US markets, you need to stay 5-7 years for buying to be cheaper. In expensive cities (San Francisco, NYC, Boston), renting is often cheaper even after 10+ years. In affordable markets (Dallas, Phoenix, Atlanta), buying wins after 3-5 years. The key variables are your local price-to-rent ratio, how long you'll stay, and what you'd do with the down payment money if you rented instead.
Does buying always build more wealth than renting? ▼
No — and this is one of the biggest myths in personal finance. If a renter invests the difference between renting and buying costs (including the down payment) in the stock market, they can often build comparable or even greater wealth. The S&P 500 has returned an average of ~10% annually (7% after inflation) over the past century, while home prices have averaged 3-4% appreciation. The forced savings aspect of a mortgage is real, though — many people are more disciplined about mortgage payments than voluntary investing.
How long should you stay in a house for it to be worth buying? ▼
The general rule is 5-7 years minimum, but it depends heavily on your market. Closing costs when buying (2-5%) and selling (6-10%) mean you lose 8-15% in transaction costs. You need enough time for appreciation and equity building to overcome that. At 3.5% annual appreciation, a $400K home gains ~$14K/year in value, while buying + selling costs might total $36-60K. This math suggests 3-5 years minimum in an average market.
What tax benefits do homeowners get in 2026? ▼
The main benefit is the mortgage interest deduction — but only if you itemize deductions (which most people don't since the 2018 TCJA raised the standard deduction to $15,000 for singles / $30,000 for married couples in 2026). If you do itemize, you can deduct interest on up to $750K of mortgage debt, plus up to $10,000 in state/local taxes (SALT cap). The capital gains exclusion is also valuable: when you sell, up to $250K/$500K of profit is tax-free if you lived there 2+ of the last 5 years.
Data Sources: Federal Reserve Economic Data (FRED) for median home prices and mortgage rates. Bureau of Labor Statistics (BLS) for rent inflation data (OER). National Association of Realtors (NAR) for transaction cost benchmarks. IRS Publication 936 for mortgage interest deduction rules.