Find out whether renting or buying leaves you better off after the number of years you plan to stay. The calculator adds up every cost on both sides and assumes the renter invests the down payment and any monthly savings. Buying a $400,000 home with 20% down at the 7.40% average 30-year mortgage rate (Freddie Mac, October 8, 2026), compared with renting a similar home for $2,400 a month, leaves the renter about $11,476 ahead after 7 years. Buying pulls ahead in year 9.
Rent vs Buy Calculator
Compare your net worth after renting or buying · Updated October 13, 2026
- Buyer’s net worth after selling
- –
- Renter’s net worth (investments)
- –
- Mortgage payment (principal and interest)
- –
- Total cost of owning, first month
- –
- Home equity before selling costs
- –
- Total rent paid
- –
- Buying pulls ahead in
- –
| Year | Buy | Rent | Ahead |
|---|
Net worth = home value minus selling costs and loan balance, plus any money invested. Taxes, PMI and inflation are not included.
How the comparison works
- The buyer pays the down payment and closing costs at the start, then each month the mortgage payment, property tax, homeowners insurance, HOA dues and maintenance. Property tax and maintenance are a percentage of the home's value, and insurance and HOA dues rise with that value.
- The renter pays rent, which rises each year, and invests the cash the buyer spent at closing.
- Each month, whoever spends less on housing invests the difference at the investment return you enter. Early on that is usually the renter; once rents rise past the owner's costs, the buyer starts investing.
- At the end, the buyer's net worth is the home's value minus selling costs and the remaining loan, plus any investments. The renter's net worth is the investment account. The gap between the two is the result.
Example: renting vs buying a $400,000 home
| After | Buyer's net worth | Renter's net worth | Buying minus renting |
|---|---|---|---|
| 1 year | $70,288 | $104,564 | −$34,276 |
| 3 years | $100,598 | $129,832 | −$29,234 |
| 5 years | $133,413 | $155,182 | −$21,768 |
| 7 years | $168,992 | $180,468 | −$11,476 |
| 10 years | $228,184 | $217,903 | $10,281 |
| 15 years | $348,550 | $280,417 | $68,134 |
| 20 years | $520,745 | $357,890 | $162,855 |
Renting wins at first because the buyer pays about $12,000 of closing costs, faces 6% selling costs whenever they leave, and puts most of each early mortgage payment toward interest. The first month of owning costs $3,048.95 (a $2,215.62 mortgage payment plus $833.33 of tax, insurance and upkeep), $648.95 more than rent. Over time the loan balance shrinks, the home's value grows and rent keeps rising, so the buyer catches up.
What tips the balance
- The mortgage rate. At 6.00% instead of 7.40%, the same purchase is ahead of renting by $24,801 after 7 years and pulls ahead in year 5.
- The rent. If a similar home rents for $2,000 instead of $2,400, renting stays ahead by $54,977 after 7 years and buying doesn't catch up until year 26.
- How long you stay. Closing and selling costs are paid once, so the longer you stay, the more years you have to recover them.
- Home price growth versus investment return. The buyer's wealth rides on the home's value, while the renter's rides on the investments. Try a lower home price growth rate, or a higher return, to see how sensitive the answer is.
What this calculator leaves out
- Taxes. Mortgage interest and property tax are deductible only if you itemize, and most households take the standard deduction instead. When you sell a main home you have owned and lived in for at least 2 of the last 5 years, up to $250,000 of gain ($500,000 for married couples filing jointly) is tax-free. Tax on the renter's investment gains isn't modeled either.
- Mortgage insurance. With less than 20% down on a conventional loan you will usually pay PMI until you build enough equity. The calculator warns you but does not add it.
- Renters insurance, moving costs and big one-off repairs such as a new roof, which the maintenance percentage only averages out.
- Things money can't measure, such as the freedom to move or the stability of owning.
FAQ
How many years do I need to stay for buying to pay off?
There is no single answer, which is why the calculator reports the year buying pulls ahead. In the example above it is year 9 at a 7.40% mortgage rate and year 5 at 6.00%. Because closing costs are paid when you buy and selling costs when you leave, a short stay rarely gives the home enough time to make up for them.
What investment return should I use?
Use what you would realistically earn on the money, after fees. Cash in savings earns much less than a stock index fund, which can also fall in value. Trying 3%, 5% and 7% gives a sensible range.
Isn't rent just money thrown away?
Rent buys you a place to live, just as mortgage interest, property tax, insurance and maintenance do for an owner. Those owner costs are not recovered when you sell either. The fair comparison is the one this calculator makes: total costs and total wealth on each side.
How much should I budget for maintenance?
It depends on the home's age and condition. The calculator uses a percentage of the home's value each year so the amount grows with the house; raise it for an older home or one that needs work.
Related calculators
- Mortgage CalculatorMonthly payment with taxes and PMI
- Home Affordability CalculatorHow much house you can afford
- Rent Affordability CalculatorHow much rent fits your budget
Sources
- Freddie Mac Primary Mortgage Market Survey: Mortgage rates average 7.40% · October 8, 2026
- IRS: Topic 701, Sale of your home
- Consumer Financial Protection Bureau: When can I remove PMI?
Figures current as of October 13, 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
Spotted a mistake? Contact us and we will fix it and update the date above.