Rent vs buy calculator
Compare the true cost of renting versus buying, including equity, taxes, appreciation and the opportunity cost of your down payment.
Buying parameters
Down payment: $70,000
Renting parameters
Expected return if the renter invests the down payment and any savings
Key insights
Important factors to consider in the rent vs buy decision.
- Hidden costs of ownership
Beyond the mortgage, homeowners pay property taxes, insurance, maintenance, and potential HOA fees that can add 30-50% to the monthly cost of owning.
Your estimated monthly extras: $897/mo
- Opportunity cost of the down payment
Your down payment could be invested in the market instead. At 7% annual return, that money grows substantially over time.
$70,000 invested at 7% for 10 years becomes $137,701
- The 5-year rule
Financial experts generally recommend staying in a home at least 5 years. Selling sooner often means losing money to closing costs and agent commissions.
Your break-even point: Year 1, so buying may make sense
Frequently asked questions
Common questions about renting vs buying a home.
- When does buying a home make more financial sense than renting?
- Buying typically makes more financial sense when you plan to stay in the home for at least 5-7 years, have a stable income, and can afford a down payment without depleting your emergency fund. The longer you stay, the more equity you build through appreciation and mortgage paydown. However, the answer depends heavily on local market conditions, interest rates, and your personal financial situation. Use this calculator to compare the specific numbers for your scenario.
- What is the opportunity cost of a down payment?
- The opportunity cost of a down payment is the potential investment return you forgo by tying up that money in a home instead of investing it in the stock market or other assets. For example, a $70,000 down payment invested at 7% annual return would grow to approximately $137,000 in 10 years. This calculator factors in this opportunity cost by simulating the renter investing the down payment in a diversified portfolio, giving you a true apples-to-apples comparison.
- What are the hidden costs of homeownership?
- Beyond the mortgage payment, homeowners face several ongoing costs that renters avoid: property taxes (typically 0.5%-2.5% of home value annually), homeowners insurance ($1,000-$3,000+ per year), maintenance and repairs (budget 1%-2% of home value annually), HOA fees ($200-$500+/month in some communities), and closing costs when buying and selling (2%-5% each). These costs can add $1,000-$2,000+ per month to the true cost of owning a home.
- How do tax benefits affect the rent vs buy decision?
- Homeowners can deduct mortgage interest and property taxes on their federal tax return if they itemize deductions. However, with the standard deduction at $16,100 (single) or $32,200 (married filing jointly) for 2026, many homeowners find that itemizing no longer provides a benefit. The tax advantage is most significant in the early years of a mortgage when interest payments are highest and for homeowners in higher tax brackets. This calculator estimates the mortgage interest deduction based on your marginal tax rate.
- What is the 5-year rule for buying a home?
- The 5-year rule is a general guideline suggesting that you should plan to stay in a home for at least 5 years before buying makes financial sense. This is because the upfront costs of buying (closing costs, moving expenses) and the heavily interest-weighted early mortgage payments mean it takes several years before you build meaningful equity. Additionally, selling a home involves agent commissions (typically 5%-6% of the sale price) that can erase gains from a short ownership period. Use this calculator to find your specific break-even timeline.
Disclaimer
This calculator is provided for informational and educational purposes only. The results are estimates based on the inputs you provide and simplified assumptions. Actual costs will vary based on local market conditions, closing costs, PMI, specific tax situations, and other factors not modeled here. This tool does not constitute financial or real estate advice. Please consult a qualified financial advisor and real estate professional before making housing decisions.
By the numbers
What the data says
- Week of October 30, 2025
6.17%
Average 30-year fixed mortgage rate
Down from 6.72% a year earlier
Source: Freddie Mac, Primary Mortgage Market Survey - September 2025
$415,200
Median price of an existing US home
Up 2.1% from a year earlier
Source: National Association of Realtors, Existing-Home Sales - Latest state ranking
0.28% to 2.38%
Effective property tax rates by state, from Hawaii to New Jersey
Share of home value paid in tax each year
Source: Tax Foundation, How High Are Property Taxes in Your State?
National figures from the sources shown, as of the period on each card. They are context, not a forecast or advice for your situation.
Need personalized housing advice?
Warren helps you weigh renting against buying for your own income, savings and goals, with clear next steps.