Rent vs Buy Calculator (2026)
Updated for May 2026.
Buying is not always better than renting — it depends on how long you stay, your local market, and the current mortgage rate. Enter your numbers and get your break-even point: the year at which buying becomes cheaper than renting.
Use the Calculator
What to enter (renting side):
- Current monthly rent
- Annual rent increase rate (typically 2–4%)
What to enter (buying side):
- Home purchase price
- Down payment (amount or %)
- Mortgage rate — current 30-year average is 6.37% (source: FRED:MORTGAGE30US, data/rates.json)
- Loan term (30 or 15 years — 15-year rate is 5.72%, data/rates.json)
- Property tax rate (typically 0.5–2.5% of home value per year)
- HOA fees (if any)
- Annual home maintenance estimate (rule of thumb: 1% of home value per year)
- Expected annual home appreciation (typically 3–4%)
- How long you plan to stay (years)
What you get:
- Total 5-year, 10-year, and horizon-length cost comparison
- Break-even year (when buying becomes cheaper)
- Equity built over your time horizon
- Net cost of buying vs. renting at your planned stay length
Current Rate Context (May 2026)
The Fed funds rate sits at 3.75% (FRED:FEDFUNDS, data/rates.json). The 30-year mortgage rate is 6.37% — the spread above the Fed rate is 2.62%, wider than the historical 1.8–2.2% average, reflecting post-pandemic market conditions.
What this means for the rent vs. buy calculation:
- A $300,000 mortgage at 6.37% costs $1,857/month in principal and interest
- The same mortgage at 5% (pre-2022 range) cost $1,610/month — a $247/month difference
- Higher rates shift the break-even point further out, typically adding 1–3 years
Sample Calculation: $400,000 Home vs. Renting
Assumptions:
- Home price: $400,000
- Down payment: 20% ($80,000)
- Mortgage: $320,000 at 6.37%, 30-year → $1,982/mo P&I
- Property tax: 1.2% → $400/mo
- Maintenance: 1% → $333/mo
- HOA: $0
- Total monthly cost of owning: ~$2,715/mo (before tax deduction)
Renting side:
- Current rent: $2,000/mo
- Annual rent increase: 3%
| Year | Cumulative rent paid | Cumulative buy cost (net of equity) | Winner |
|---|---|---|---|
| 1 | $24,000 | $52,600 | Rent |
| 3 | $74,200 | $97,400 | Rent |
| 5 | $126,500 | $136,200 | Rent (close) |
| 7 | $182,300 | $157,600 | Buy |
| 10 | $274,800 | $175,900 | Buy |
In this example the break-even is around year 6–7. If you plan to stay fewer than 6 years, renting is likely cheaper. If you plan to stay 10+ years, buying builds significant equity advantage.
Equity built by year 10: approximately $82,000 (loan paydown) + estimated $148,000 appreciation at 3%/year = $230,000 in net worth added.
The Break-Even Rule of Thumb
Without running full numbers, a shortcut: if the monthly cost of ownership exceeds monthly rent by more than 20%, you need to stay at least 7–10 years for buying to win.
Factors that shorten the break-even:
- High rent growth rate (above 3%)
- Strong home appreciation (above 4%)
- Long planned stay (10+ years)
- Low property taxes
Factors that lengthen the break-even:
- High mortgage rate (above 6.37%)
- Large transaction costs (agent fees, closing costs — typically 2–5% on purchase, 5–6% on sale)
- Low home appreciation
- Short planned stay
Hidden Costs of Buying That Most Calculators Miss
| Cost | Typical amount | Notes |
|---|---|---|
| Closing costs (purchase) | 2–3% of loan | Includes origination, title, escrow |
| Home inspection | $300–$600 | One-time at purchase |
| Moving costs | $1,000–$5,000 | Varies by distance |
| Immediate repairs/upgrades | $0–$20,000+ | Depends on home condition |
| Annual maintenance | ~1% of home value | $4,000/yr on a $400k home |
| Selling costs | 5–6% of sale price | Agent commission + closing |
| PMI (if <20% down) | 0.5–1.5% of loan/yr | Until 20% equity reached |
The calculator includes maintenance and estimated selling costs in the total cost of ownership. Many free calculators don't — which makes buying look cheaper than it is.
Also Useful
- Mortgage Calculator — find your exact monthly payment at any price and rate
- How Much House Can I Afford on $80K Salary? — affordability guide by income level
- How a Fed Rate Hike Affects Your Mortgage — understand what rate changes mean for your payment
Frequently Asked Questions
Is buying always better than renting long-term?
No — it depends on your market, stay length, and the opportunity cost of the down payment. If your $80,000 down payment would return 7% annually in an index fund, that's ~$157,000 in 10 years. If your home appreciates at 3%, the same $80,000 equity grows to about $107,000. In high-rent markets with strong appreciation, buying wins. In slower markets with short stays, renting and investing the down payment can outperform. The calculator models both.How does the calculator account for building equity?
Every mortgage payment splits between principal and interest. Principal payments reduce your loan balance — that's equity you own. At 6.37% on a 30-year loan, roughly 15% of your first payment goes to principal (rising over time as the loan amortises). The calculator tracks loan paydown plus estimated home appreciation to show total equity at any point in your horizon.What home appreciation rate should I use?
Nationally, US home prices have appreciated roughly 3–4% per year on average over long periods, though this varies widely by market. For a conservative scenario use 2–3%; for a base case use 3–4%; for a hot market use 4–5%. Avoid using recent years' appreciation rates (some markets saw 15–20% in 2021–2022) as a baseline — those are outliers, not norms.The calculator says buying is better — should I buy?
The calculator shows financial outcomes only. Buying also involves: job stability, family plans, credit score, down payment availability, and your emotional readiness to maintain a home. The financial case for buying is necessary but not sufficient. If the numbers are close (break-even in 4–6 years), your personal circumstances should drive the decision.This article is for informational purposes only and does not constitute financial advice. Mortgage rate sourced from FRED:MORTGAGE30US (6.3%) and federal funds rate from FRED:FEDFUNDS (3.75%) as of May 11, 2026. Property appreciation and cost estimates are illustrative.