🏠 Rent vs Buy Calculator

Buying beats renting when the cumulative cost of buying (mortgage + taxes + insurance + maintenance + closing costs minus equity built and appreciation) is lower than the cumulative cost of renting (rent + renters insurance, plus the opportunity cost of not investing your down payment). For most US buyers in 2026, break-even lands between years 3 and 7. The classic 5-year rule of thumb: plan to stay 5+ years, or buying usually loses.

The 5% rule says renting is cheaper than buying if your annual rent is less than 5% of the home's purchase price. Example: a $400,000 home costs ~$20,000/yr to own (mortgage + taxes + insurance + maintenance). If you can rent an equivalent place for $1,500/mo ($18,000/yr), renting is cheaper before opportunity cost. If rent is $1,200/mo ($14,400/yr), buying is often the better long-term move.

No — rent is the market price for housing without tying up $50,000-$200,000 in illiquid home equity. The opportunity-cost argument cuts the other way: that down payment could be invested in an index fund returning 7-8%/yr. Whether rent or buy wins depends on (1) length of stay, (2) rent-to-price ratio in your city, (3) home appreciation in your market, and (4) what you'd actually do with the down payment if you kept it invested.

Buying side: mortgage principal + interest, property tax (default 1.1%/yr), homeowners insurance (0.35%/yr), maintenance (1%/yr), closing costs (3% of home price, one-time). Renting side: monthly rent, renters insurance ($15/mo default). We also subtract equity built and add home appreciation on the buy side, and add investment returns on the renter's down payment on the rent side.

If you sell before break-even, you lose money on the transaction costs (typically 6-8% of sale price in commissions + closing) that haven't been recouped through equity + appreciation. This is the single biggest reason the 5-year rule of thumb exists. Selling at year 3 in a 5-year break-even scenario usually leaves you $20,000-$40,000 short of where renting would have put you. Plan to stay 7+ years in most US markets to be safe.

The math is the same but the assumptions differ. Canada: property tax is municipal (~0.5-1.5%/yr depending on city), home insurance is 0.2-0.4%/yr, mortgage terms are 5-yr fixed (not 30-yr). UK: stamp duty adds 0-12% on top of purchase price, leasehold fees apply for flats. Edit the inputs to match your country — the calculator is country-agnostic on purpose.

No — this calculator shows pre-tax cost. In the US, homeowners who itemize can deduct mortgage interest on up to $750,000 of acquisition debt, which can be meaningful in early years. On the default $400k scenario at 6.5%, year-1 interest is roughly $20,500; at a 24% marginal rate that's ~$4,900/yr in tax savings, shrinking as the loan amortizes. To factor it in, mentally subtract 22-32% of your annual mortgage interest from the buy-side numbers (or whatever your marginal bracket is). Married couples in 12%+ brackets with mortgage balances above ~$200k usually see the biggest effect. Property tax is also deductible up to the $10,000 SALT cap.