Rent vs Buy Calculator
Is it cheaper to rent or buy? Put in your own rate, costs and years and see the net cost of each, with the sources and the assumptions in plain view.
Your result
Over 10 years, renting comes out about $29,322 cheaper than buying with these inputs: a net cost of $213,008 to buy against $183,686 to rent.
Buying never stays cheaper than renting inside 10 years with these inputs. The payment on principal and interest is $2,023 a month.
| Buying | Over 10 yrs |
|---|---|
| Mortgage interest | $193,998 |
| Property tax | $45,856 |
| Insurance and HOA | $20,635 |
| Maintenance | $45,856 |
| Closing costs | $12,000 |
| Selling costs | $32,254 |
| Home price growth ($137,567) | -$137,567 |
| Growth on the buyer's invested savings (rent gaps and tax savings) | -$28 |
| Capital gains tax on that growth | $4 |
| Net cost of buying | $213,008 |
| Renting | Over 10 yrs |
| Rent paid | $330,160 |
| Growth on $92,000 invested at the start, plus monthly savings | -$172,322 |
| Capital gains tax on that growth | $25,848 |
| Net cost of renting | $183,686 |
Principal repaid ($48,716) is not a cost: it comes back as equity. After selling costs and the $271,284 left on the loan, you would walk away with $234,029.
Year by year
| Sell in year | Net cost to buy | Net cost to rent |
|---|---|---|
| 1 | $55,215 | $20,727 |
| 2 | $74,145 | $41,085 |
| 3 | $92,775 | $61,028 |
| 4 | $111,085 | $80,502 |
| 5 | $129,055 | $99,448 |
| 6 | $146,664 | $117,799 |
| 7 | $163,891 | $135,486 |
| 8 | $180,712 | $152,427 |
| 9 | $197,101 | $168,534 |
| 10 | $213,008 | $183,686 |
The home and the loan
Starting values are examples, not today’s market. Enter your own price and the rate a lender quoted you.
Costs of owning
Rules of thumb and examples, not official figures. Check your own tax bill, insurance quote and HOA statement.
Renting
What the cash earns if you rent
The renter invests the down payment, the closing costs and any month where owning costs more than rent. The buyer invests any month where rent costs more. Gains are taxed once, at the end.
Mortgage interest deduction
You can only deduct mortgage interest if you itemize on Schedule A. If your itemized deductions add up to less than the standard deduction, the interest saves you nothing. Turn this on to test it.
How it is calculated
- Same cash for both. Each month, whoever spends less than the other invests the difference. The renter also invests the down payment and the closing costs on day one. That way both paths use the same money and the comparison is fair.
- Buying. The loan payment is the standard level payment for your rate and term. Property tax and maintenance follow the home’s value as it grows. Insurance and HOA grow at the rate you set. When you sell, you pay selling costs and the loan balance left on the schedule.
- Net cost. Buying: interest, tax, insurance, HOA, maintenance, closing and selling costs, minus the price growth, minus any tax savings and investment growth. Renting: rent paid, minus investment growth. Principal is left out because you get it back as equity. The difference between the two net costs equals the difference in what you would own at the end.
- Mortgage interest deduction. Off by default. When on, the tax saved each year is your marginal rate times the amount your itemized deductions (with the interest) exceed the standard deduction, minus the same figure without the interest. If your average loan balance is above $750,000($375,000 married filing separately), only the share of interest under that limit counts. The standard deduction stays at its 2026 amount for every year, and the average balance is a simple average of the year’s monthly balances.
- Investment return. Either your own rate or the S&P 500’s 10.0% a year, the compound rate of its annual total returns from 1928 to 2025. It is nominal. The gain on invested cash is taxed once, at the end, at the capital gains rate you set (15% to start). The home’s gain is assumed to fall within the section 121 home sale exclusion, so it is not taxed. Returns arrive in a straight line each month here; real markets do not.
Sources, read on October 27, 2026
- IRS Publication 936, Home Mortgage Interest Deduction (for 2025 returns): “first $750,000 ($375,000 if married filing separately) of indebtedness”The $750,000 debt limit ($375,000 married filing separately), and that you only get the deduction if you itemize on Schedule A.
- IRS newsroom, 2026 tax inflation adjustments: “the standard deduction increases to $32,200 for married couples filing jointly”The 2026 standard deduction: $16,100 single or married filing separately, $24,150 head of household, $32,200 married filing jointly.
- CFPB, Loan Estimate explainer: “This is the amount you will have to pay at closing”What "cash to close" means. The closing cost percentage itself is your input: the CFPB page does not give one we could verify.
- Aswath Damodaran, NYU Stern, Historical Returns on Stocks, Bonds and BillsAnnual S&P 500 total returns 1928 to 2025 for the optional investment return. Data through December 2025, updated September 27, 2026.
Property tax, insurance, HOA, maintenance, closing and selling costs, price growth and rent growth have no official figure. They are your inputs, and the starting values are examples. We have not checked them against any survey.
What this leaves out
- Private mortgage insurance: neither its cost nor any deduction for it is modelled. Points and the lender’s fees beyond your closing cost percentage are left out too.
- Tax on a home sale gain above the section 121 exclusion ($250,000, or $500,000 married filing jointly), and the two-year ownership and use test. Tax on investment gains is a flat rate at the end, not a bracket calculation.
- The federal cap on state and local tax deductions, and any state tax rules.
- Renters insurance, moving costs, and the value of owning or renting that is not money.
- Refinancing, extra payments, and rates that change over time.
This is an educational tool, not financial, tax or legal advice. It does not know your situation. Check the numbers with your lender and a tax professional before you decide.
Rent vs buy questions
Answers use the example inputs: $400,000 home, 20% down, a 6.5% 30-year loan, $2,400 rent, sold or left after 10 years.
Is it cheaper to rent or buy a home?
It depends on your inputs, mostly on how long you stay and what your savings would earn. In the example ($400,000 home, 20% down, a 6.5% 30-year loan, $2,400 rent, sold or left after 10 years, with the down payment invested at the S&P 500's 10.0% historical return), renting comes out $29,322 cheaper. Change the inputs above and the answer can flip.
How long do you have to stay in a home for buying to beat renting?
In the example, buying does not catch up with renting inside 10 years. Closing and selling costs total $44,254 here, and they are paid whether you stay one year or ten.
What does the down payment cost me if I invest it instead?
The renter in the example invests $92,000 (the down payment plus closing costs) on day one and earns $172,322 over 10 years at the S&P 500 historical rate, before a 15% capital gains tax of $25,848. At a flat 5% instead, the result is $58,954 in favor of buying. The return you pick moves the result a lot.
Does the mortgage interest deduction change the answer?
Only if you itemize. In the example you would pay $193,998 of interest over 10 years, but with a single filer's 2026 standard deduction of $16,100, itemizing adds $17,519 of tax savings at a 24% rate, with the first year's property tax as your only other itemized deduction. If your itemized deductions stay under the standard deduction, the interest saves you nothing.
What costs do people forget when they compare rent and a mortgage?
The payment is only part of owning. In the example, over 10 years you also pay $45,856 in property tax, $20,635 in insurance, $45,856 in maintenance, $12,000 to close and $32,254 to sell. Principal ($48,716 here) is not a cost, because you get it back as equity.
Related calculators
- S&P 500 calculator: See what the invested down payment grows to on its own.
- Compound interest calculator: Test a different return than the S&P 500 history.
- S&P 500 DCA calculator: Model the monthly savings a renter can invest.