Formulas and 2026 figures checked & updated: July 2026
Return assumed on the down payment and any monthly savings vs. owning.
$80,000
Annual, as % of home price.
As % of home price per year.
How to Use the Rent vs Buy Calculator
- Enter your current or expected monthly rent and its expected annual growth.
- Enter the home price, down payment, mortgage rate, and term you're considering.
- Add ownership costs — property tax, insurance, maintenance, and HOA.
- Set how many years you plan to stay and your expected investment return. Example: renting at $2,200/mo vs. buying a $400,000 home with 20% down often favors buying past year 6–7, once equity and appreciation outweigh renting's flexibility.
What This Calculator Does
The Rent vs Buy Calculator models the full financial picture of both paths over your chosen time horizon — not just the monthly payment.
For buying, it tracks mortgage paydown, home appreciation, and all the extra costs of ownership (taxes, insurance, maintenance, HOA, closing and selling costs). For renting, it assumes you invest the down payment and any monthly savings versus owning, then compares the two net positions at the end of your horizon.
Formula
Net Advantage = Rent Net Cost − Buy Net CostBuy Net Cost = total ownership cash outlay + down payment + closing costs − final home equity (value − loan balance − selling costs). Rent Net Cost = total rent paid + down payment + closing costs − invested balance (grown at your assumed return).
- Home EquityHome value − remaining loan balance − estimated selling costs
- Invested BalanceDown payment + closing costs + monthly savings vs. renting, compounded
Examples
Example 1: $2,200 rent vs. $400,000 home, 7-year stay
20% down, 6.75% rate, 3.5% appreciation, 7% investment return on the rent side.
Buying typically builds enough equity by year 6–7 to overtake renting's invested down payment, especially once appreciation compounds.
Example 2: Shorter 3-year stay
Same numbers, but you relocate after only 3 years.
Closing and selling costs (roughly 10% combined) often aren't offset yet — renting usually comes out ahead over short horizons.
Key Terms Explained
- Down Payment
- The upfront cash you pay toward a purchase, reducing the amount financed. A larger down payment lowers monthly payments and can avoid PMI.
- Interest Rate
- The percentage a lender charges on the principal, before fees. Unlike APR, the interest rate alone doesn't include origination or other loan costs.
- Amortization
- Paying off a loan through fixed payments over time. Early payments are mostly interest; later payments are mostly principal as the balance shrinks.
- Compound Interest
- Interest earned on both your original balance and previously earned interest, so growth accelerates the longer money stays invested.
Continue Your Financial Planning
Methodology
Buying cost = mortgage P&I + property tax + insurance + maintenance + HOA, plus closing and selling costs, minus home equity built through paydown and appreciation. Renting cost = total rent paid, minus a side investment account seeded with the down payment and closing costs and grown by any month renting is cheaper than owning. Whichever ends with the lower net cost 'wins'.
Frequently Asked Questions
How long do I need to stay to make buying worth it?+
Most rules of thumb suggest 4–7 years, since closing costs (2–5% of the price) and selling costs (6–8%) take time to offset through equity and appreciation. Adjust the 'Years you'll stay' slider to test your own horizon.
What costs does 'buying' include that renting doesn't?+
Property taxes, homeowners insurance, maintenance (typically ~1% of home value per year), HOA dues, and one-time closing and selling costs. Renting avoids all of these but builds no equity.
Why does the calculator assume renters invest the difference?+
To compare fairly, we assume the renter invests their down payment plus any month where rent is cheaper than owning, at your chosen investment return. This is the standard opportunity-cost approach used in most rent-vs-buy analyses.
Does home appreciation always favor buying?+
Not necessarily. Higher appreciation helps buying, but if your investment return assumption is also high, renting and investing the difference can still win — especially over shorter holding periods.
Is it better to rent or buy a house in 2026?+
It depends on your local price-to-rent ratio, how long you plan to stay, and current mortgage rates. As a rule of thumb, a price-to-rent ratio above 20 in your area often favors renting in the short term, while a ratio below 15 tends to favor buying faster. Enter your own numbers above instead of relying on a single national rule of thumb.
What is a price-to-rent ratio and how do I use it?+
Price-to-rent ratio is a home's purchase price divided by its annual rent (e.g., a $400,000 home renting for $2,200/mo has a ratio of about 15). It's a quick screening tool, but this rent vs. buy calculator goes further by modeling your actual mortgage rate, down payment, appreciation, and investment return so you get a real dollar comparison, not just a ratio.
Can I save my results?+
Yes. Use “Save results” to store a snapshot. Without an account it remains in this browser. If you log in, saved scenarios sync securely to your SmartRates account so they are available on your other devices.
How do I share my calculation?+
Click “Share” in the toolbar to copy a link (or open your device’s share sheet). The link encodes your exact inputs, so whoever opens it sees the calculator pre-filled with the same numbers and the same result.
Can I email my calculator results?+
Yes. Click “Email results” to open your default email application with the current inputs, results, and calculator link already included. Review the message and choose the recipient before sending.
Can I export or print my results as a PDF?+
Yes. Click “Export PDF” to open a clean, printable summary of your inputs and results that you can save as a PDF or print. It includes a timestamp and a link back to the calculator.
How accurate are the calculator results?+
The arithmetic follows the formula and assumptions documented on this page. The result is still an estimate because actual rates, fees, taxes, timing conventions, eligibility rules, and provider calculations can differ. Use figures from your official quote, statement, contract, or tax form before making a financial decision.
Which inputs have the biggest effect on the result?+
Rate, time, starting balance, recurring payments or contributions, and fees usually have the largest effects. Change one input at a time to create a conservative, expected, and optimistic scenario instead of relying on a single forecast.
Are taxes, fees, and inflation included?+
Only when they appear as an input or are explicitly described in the methodology. Do not assume an omitted cost is zero. Review the formula and methodology sections to see exactly what is included before comparing the result with an outside quote.
Can this calculator predict future rates or returns?+
No. A calculator projects the assumptions entered; it cannot predict market returns, inflation, variable interest rates, tax-law changes, or provider decisions. Rerun the calculation with several assumptions to understand the range of possible outcomes.
Why might my lender, bank, broker, or tax software show a different result?+
Professional systems may use daily timing, transaction dates, compounding conventions, rounding rules, account-specific fees, credits, eligibility details, or regulations that a general-purpose calculator cannot know. A small difference can be rounding; a large difference usually means an assumption or included cost is different.
Disclaimer: Calculations are for informational purposes only and do not constitute professional financial advice. Please consult with a certified professional before making financial decisions.