Rent vs. buy calculator
Compare renting vs. buying a home, including mortgage costs, taxes, maintenance, and investing the difference. Estimate your net worth and buying break-even year.
Renting is favored. Estimated difference $39,625 after 7 years.
Renting is ahead
more estimated net worth after 7 years
Net worth over time
After selling the home, paying off the loan, and investing monthly savings.
Appreciation, costs, and investments
At 3% appreciation, your home gains $103,443 in value. Buying includes $46,707 in transaction costs, while the renter’s investments earn $56,362 at 5%.
Advertiser disclosure
Mortgage offers are provided by ICanBuy and participating lenders. We may receive compensation when you click a sponsored offer. Rates, APRs, fees, availability, and eligibility are determined by the provider and lenders. Offers use a representative credit tier for your selected range; FHA searches may include other loan programs. Advertised rates do not change your calculator’s assumed rate.
About ICanBuyFinancial summary
Mortgage insurance: none in this scenario. All values are estimates in future dollars unless indicated otherwise. Net worth shown is the wealth attributable to this housing decision, not your total household wealth.
How to use this rent vs. buy calculator
- Compare a home you could buy with a similar rental. Enter the home price, monthly rent, down payment, mortgage rate, and years you expect to stay. The example rate is not a current mortgage quote.
- Open the ownership, renting, and tax assumptions. Use local tax and insurance estimates, and include maintenance, HOA fees, mortgage insurance, and buying and selling costs. This model uses U.S. dollars and simplified U.S. federal taxes.
- Compare estimated net worth and the buying break-even year. Use “What if?” to test a shorter stay, lower appreciation, and different investment returns. Review the cost breakdown before deciding.
A lower mortgage payment does not necessarily mean buying costs less. Money tied up in a home has an opportunity cost, while principal payments build equity. The methodology explains how both enter the comparison.
A rent vs. buy example over 7 years
Our example compares a $450,000 home with rent of $2,400 a month, 20% down, and a 6.25% fixed mortgage over 30 years. Home appreciation and rent growth are both 3% a year; the after-tax investment return is 5%.
- Buyer wealth after sale
- $196,116
- Renter wealth
- $235,741
- Renting advantage
- $39,625
- Buying break-even
- Not within 7 years
These are future-dollar estimates using all the example assumptions, including taxes, insurance, maintenance, and transaction costs. They are illustrative, not a forecast for Austin or your local market. Changing your calculator inputs does not change this example.
This replaces your current inputs so you can inspect every assumption.
How the rent vs. buy
calculator works
Both households start with the same cash and monthly budget.
View cost breakdownEqual starting cash
Both households start with $103,500. Any cash left after upfront costs is invested.
Invest monthly savings
Each month, the household with lower costs invests its savings. Both earn your 5% after-tax return.
Compare net worth after selling
We sell the home at each annual checkpoint, settle the mortgage and taxes, return the rental deposit, and compare wealth.
Model assumptions, tax rules & sources
Model v1 uses a January 2026 purchase, full calendar years, a fixed-rate mortgage, on-time payments, annual price and rent adjustments, and month-end investing. Insurance, upkeep, HOA, and extra utilities grow with inflation from their initial amounts. No refinancing, investment volatility, moving costs, major improvements beyond your entered costs, or future income growth are assumed.
Federal tax savings use the additional itemized deduction above the renter’s deduction at your entered marginal rate, capped by estimated available taxable income. Standard deductions are held at 2026 values: $16,100 single, $24,150 head of household, and $32,200 married filing jointly. Qualified mortgage interest is prorated above $750,000 of average debt. SALT caps grow 1% through 2029, with the statutory income phase-down and $10,000 floor; the cap reverts to $10,000 in 2030. The starting $505,000 income threshold also grows 1% annually through 2029.
This is an incremental deduction estimate, not a full progressive tax return. State tax benefits, alternative minimum tax, senior deductions, credits, the high-income itemized-deduction limitation, and potential mortgage-insurance deductibility are not modeled. Income is used as a simplified AGI/MAGI proxy. Exclusion-eligible home sales after two years receive up to $250,000 single/head or $500,000 joint exclusion. Taxable gains may incur 3.8% net investment income tax. Investment returns are entered after tax and fees; portfolios are not taxed a second time.
ZIPs are looked up locally using the bundled zipcodes dataset and can become outdated. “Use my location” estimates the nearest ZIP center after browser permission; it does not determine postal boundaries. Confirm the ZIP for the property you’re comparing. State presets are illustrative planning values, not verified local rates. Confirm actual assessments, exemptions, insurance, and loan eligibility. Advertised mortgage offers are provided separately by ICanBuy and do not set your calculation assumptions. Break-even is an annual checkpoint sustained through your selected horizon, not a guarantee beyond it. Today’s-dollar chart values deflate each checkpoint at your inflation assumption; they are not a discounted monthly cash-flow valuation.
Renting vs. buying:
common questions
Should I rent or buy?
Start with your time horizon, local prices, and what a comfortable monthly payment looks like. This calculator compares estimated wealth, but flexibility, stability, job plans, and the work of owning a home matter too. Test several scenarios before making a decision.
What is opportunity cost?
Money used for a down payment and closing costs cannot be invested elsewhere. We give the buyer and renter the same starting cash and monthly budget, then invest any unspent money at your assumed after-tax return. That makes the tradeoff visible without counting it twice.
How do tax benefits affect the result?
Owning only creates a modeled deduction benefit when your allowable mortgage interest and property taxes increase your deductions beyond what you would already claim as a renter. Filing status, income, the mortgage debt limit, and the SALT cap can reduce that benefit. This is an estimate of federal taxes, not a tax return.
Which ownership costs are commonly overlooked?
Maintenance, major repairs, homeowners insurance, HOA fees, extra utilities, closing costs, mortgage insurance, and the costs of selling all add up. The annual maintenance allowance is a planning reserve; actual repair bills are uneven and could be much higher.
How long must I stay for buying to make sense?
There is no universal five-year rule. Our break-even year is the first annual checkpoint when buyer wealth is ahead and stays ahead through your chosen horizon. It includes a hypothetical sale at each checkpoint. Changing the horizon or assumptions can change the answer.
Does appreciation always make buying better?
No. Appreciation increases potential equity, but financing, upkeep, selling costs, and investment returns still matter. Home prices can also fall. Try a low-appreciation or declining-price scenario in the what-if analysis.
What happens if rent rises?
The model increases rent once a year by your rent-growth assumption. Faster increases generally make buying more competitive, but owner costs also grow. The calculation invests each household’s monthly savings, even if the lower-cost option changes over time.
How accurate is the calculator?
The arithmetic is deterministic, but future prices, investment returns, tax laws, and costs are uncertain. This is a fixed-rate, primary-residence planning model with simplified federal taxes and after-tax investment returns. Verify local taxes and insurance, test multiple scenarios, and consult qualified financial, tax, or real-estate professionals for personalized advice.
Does renting and investing the difference beat buying?
It can, depending on rent, ownership costs, investment returns, and how long you stay. This calculator invests the unused starting cash and monthly savings for both households. Try a lower after-tax investment return as well as a higher one, and compare the final wealth and cost breakdown. Returns are assumptions, not guaranteed earnings.
Why do rent vs. buy calculators give different answers?
Calculators may compound returns monthly or annually, grow expenses differently, or report future dollars instead of inflation-adjusted dollars. They can also treat tax deductions and selling costs differently. Match the inputs, time horizon, and definition of the result before comparing. Here, the main result is buyer wealth minus renter wealth after a hypothetical sale, with both households investing their savings.
Advertiser disclosure
Mortgage offers are provided by ICanBuy and participating lenders. We may receive compensation when you click a sponsored offer. Rates, APRs, fees, availability, and eligibility are determined by the provider and lenders. Offers use a representative credit tier for your selected range; FHA searches may include other loan programs. Advertised rates do not change your calculator’s assumed rate.
About ICanBuyEstimates are for education and planning. Consult qualified financial, tax, or real-estate professionals for personalized advice.