Rent vs Buy Calculator USA
Compare pathsCompare renting versus buying in the United States over time. Use state-specific defaults for property tax, closing costs, and selling costs, along with filing status and sale-tax assumptions, to compare average monthly cost and ending net wealth.
Rent
This location also prefills editable buy-side defaults for property tax, closing costs, and selling costs.
Buy
this state defaults: property tax 1.1%, closing costs 3%, selling costs 5.5%. You can override any of these.
Renting ends higher after estimated selling costs.
Renting ends higher.
Buy exit estimate at year 10: selling costs $40,317.49 and sale tax $0.00.
Rent-side investment growth is taxed using the selected country, province/state, filing status, and baseline taxable income. Buy-side property tax, closing costs, and selling costs are editable regional defaults, and the buy exit can include estimated sale tax from the platform's shared asset-sale logic.
| Staying length | Rent: Avg monthly (over period) | Buy: Avg monthly (over period) | Rent: Invest balance | Buy: Equity |
|---|---|---|---|---|
| 1 year | $2,000.00 | $12,880.03 | $137,460.32 | $123,247.63 |
| 2 years | $2,030.00 | $8,101.24 | $160,857.26 | $147,367.22 |
| 3 years | $2,060.60 | $6,517.15 | $185,234.69 | $172,393.86 |
| 4 years | $2,091.81 | $5,731.93 | $210,638.73 | $198,364.16 |
| 5 years | $2,123.65 | $5,266.43 | $237,117.90 | $225,316.28 |
| 6 years | $2,156.14 | $4,960.92 | $264,723.24 | $253,290.06 |
| 7 years | $2,189.27 | $4,746.97 | $293,508.44 | $282,327.03 |
| 8 years | $2,223.08 | $4,590.35 | $323,529.99 | $312,470.58 |
| 9 years | $2,257.58 | $4,472.05 | $354,660.75 | $343,765.92 |
| 10 years | $2,292.78 | $4,380.68 | $386,958.15 | $376,260.29 |
For illustration only. This calculator does not constitute financial or legal advice. Outcome depends on assumptions; consult a qualified advisor for your situation.
About this calculator
This calculator is for anyone deciding whether to rent or buy a home. It models two scenarios over a chosen number of years: renting (with the difference between renting and the cost of buying invested) and buying (with a mortgage, property tax, insurance, and other ownership costs). Results depend heavily on rent growth, home appreciation, and investment return, so you can test different assumptions.
Use it to see how average monthly cost and net wealth compare at different time horizons. The "average monthly cost over the period" is total cost divided by total months—useful for comparing the two paths over a fixed stay. That cash-cost view is separate from the ending net wealth comparison, which includes estimated exit costs and sale taxes on the buy side. The year-by-year table and charts show how equity (if buying) and investment balance (if renting) evolve over time.
How this is calculated
What this calculator does
The Rent vs Buy calculator compares two paths over your chosen time horizon: renting (paying rent and investing the difference vs buying) and buying (paying a mortgage, taxes, insurance, and other costs while building equity). The main result is based on average monthly cost over the period: total cost from start through each year ÷ total months. When buying’s period-average monthly cost drops below renting’s, we say buying has a lower average monthly cost from that staying length onward.
Buy scenario
The loan amount is home price minus down payment. Principal and interest use the standard amortization formula:
Payment = P × [r(1+r)n] / [(1+r)n − 1]
where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. Interest is compounded monthly. Each year we add property tax, home insurance, PMI (until loan-to-value < 80%), HOA, and maintenance (as % of home value). Closing costs and down payment are one-time at the start. Home value each year is:
homeValueyear = homePrice × (1 + appreciation)year
Equity = home value − remaining loan balance (from the amortization schedule). For the ending net wealth comparison, the calculator uses editable regional defaults for property tax, closing costs, and selling costs, and can estimate tax on sale using the platform's existing asset-sale logic. That sale logic uses your selected country/province-state, filing status, sale-year taxable income, and primary-residence vs investment-property treatment.
Rent scenario
The renter starts with an initial investment = down payment + closing costs (the cash the buyer would have spent upfront). Each year, rent paid grows at your rent growth rate: renty = monthlyRent × 12 × (1 + rentGrowth)y-1. The yearly contribution to the renter's portfolio is the signed difference between the buyer’s total cost that year and the renter’s rent + insurance:
contributiony = buyerCosty − rentPaidy − renterInsurancey
The investment balance compounds annually. For each year y:
balancey = balancey−1 + growthy + contributiony
where growthy is investment return applied to the invested balance for that year. If the portfolio would fall below zero, we floor it at zero for that year rather than allowing negative investable assets; later positive yearly savings can rebuild the balance from zero. Because contributions and growth are modeled annually instead of monthly, this treatment is slightly conservative on the rent side versus a more granular monthly investing model. The renter’s net wealth at the end of the horizon is this investment balance.
Average monthly cost (two definitions)
Avg monthly (that year): cost in that single year ÷ 12. For buy, that’s (P&I + taxes + insurance + PMI + HOA + maintenance) for that year; for the first year we also include down payment + closing. For rent, it’s rent plus renter's insurance for that year ÷ 12.
Avg monthly (over period): total cost from the start through the end of year N ÷ total months:
avgMonthlyN = cumulativeCostN / (12 × N)
So at 1 year we use 12 months; at 10 years we use 120 months. The result, chart, and break-even ("buying has a lower average monthly cost if you stay for X years or longer") use this period-average definition. The separate ending net wealth result is a different lens: it includes estimated selling costs and sale taxes on the buy side.
Break-even
We find the first staying length (in years) where buy’s period-average monthly cost ≤ rent’s. If it occurs between two table rows, we use linear interpolation to report a fractional break-even (e.g. 4.1 years).
Assumptions and limitations
We assume home appreciation, rent growth, and investment return are constant each year (you set these in Advanced). Property tax and maintenance can scale with the appreciating home value. Rent-side portfolio growth is taxed using the shared tax engine. Buy-side property tax, closing costs, and selling costs are regional defaults only, so you should override them when you know your local numbers. Home-sale tax uses the platform's shared sell-asset rules, including principal-residence exemptions where applicable, but it still simplifies many legal and transaction details and does not cover every transfer-tax or jurisdiction-specific edge case. PMI is applied until LTV < 80% using the original home price. All figures are nominal (no inflation adjustment) unless you add that elsewhere. Results are for illustration only and do not guarantee future outcomes.
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