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Buying Renting Calculator

Compares the wealth of a home buyer (net sale proceeds) with that of a renter who invests the down payment, closing costs and every monthly saving, year by year, to find the break-even year and the gap at your holding period.

Break-even

Year 15

Rent vs Buy Calculator

Break-even year

Owner wealth at your holding period (net sale proceeds)

912,650.69

Renter wealth at your holding period (investment fund)

659,261.45

Owner minus renter at your holding period

253,389.24

Monthly mortgage payment (principal and interest)

2,022.62

Loan amount

320,000.00

Renter's starting fund (down payment plus closing costs)

92,000.00

First-year owner cash outlay

34,171.41

First-year rent

24,000.00

First-year owner outlay minus rent

10,171.41

Months of PMI

Method B: annual user cost of owning

22,700.00

Method B: user cost a month

1,891.67

Method B reading

Owning costs 1891.67 a month in steady state against 2000.00 rent: cheaper per year, before transaction costs.

Worked out from IRS Publication 936 (2025), Home Mortgage Interest Deduction - $750,000 acquisition-debt limit; mortgage-insurance premium deduction expired and 8 other sources.

All figures are nominal and depend on the appreciation, rent-growth and investment-return assumptions; a one-point change in appreciation moves the break-even by years.

Owner wealth is net sale proceeds after selling costs and loan payoff: it is only realisable by selling. Capital-gains tax is ignored (the $250,000/$500,000 home-sale exclusion usually covers it).

Insurance and HOA fees are fixed in today's dollars and do not escalate.

Your figures

Updates as you type

Display currencyFormatting only. This does not change the calculation.

Purchase price

Down payment (%)Below 20% adds PMI at the rate below.

Mortgage rate (APR) (%)

Mortgage term (years)The comparison runs for the whole term.

How long you expect to stay (years)The wealth gap is reported at this year. The break-even year is not "the year you should sell".

Buyer closing costs (%)Percent of the purchase price, paid in cash at purchase. CFPB: typically 2% to 5%.

Selling costs (%)Percent of the sale value (agent commissions and fees). 6% is a convention; commissions are negotiable.

Property tax rate (% of value a year)Illustrative default; look up your effective rate.

Homeowner's insurance (currency a year)Fixed in dollars; does not escalate.

Maintenance (% of value a year)The 1% rule is a convention; academic user-cost studies use 2.5% for maintenance plus depreciation.

HOA or condo fees (currency a year)

Home price appreciation (% a year)Nominal. FHFA all-transactions index averaged 4.2% a year 1991-2026; 3% is conservative.

Rent for a comparable home (currency a month)

Rent growth (% a year)Steps once a year on the anniversary. CPI rent averaged 3.9% a year 2013-2023.

Renter's insurance (currency a year)

Return on the renter's investments (% a year)Nominal, compounded monthly. Set to 0 only deliberately: it assumes the down payment would earn nothing.

PMI rate (if down payment under 20%) (% of loan a year)Charged while the scheduled balance exceeds 80% of the price (CFPB cancellation rule). 0.5% is a typical figure, not a sourced constant.

Count the federal tax benefit of itemising

Filing status (sets the 2026 standard deduction)

Marginal federal tax rate (%)

State and local income tax paid (currency a year)Shares the SALT cap with property tax.

Other itemised deductions (currency a year)Charitable gifts and the like.

SALT deduction cap 2026: $40,400 ($20,200 married filing separately), phased down above $505,000 of income to a $10,000 floor. Enter your own figure if it applies.

Mortgage interest deduction debt limit IRS Pub 936: $750,000 for debt after 15 Dec 2017 ($375,000 married filing separately). Interest is scaled down when the loan exceeds it.

How this is worked out

9 steps

Loan = 400000.00 × (1 - 20%) = 320000.00; monthly rate 6.5%/12; payment = 2022.62 (carried unrounded).
Renter's fund starts with the down payment plus closing costs: 80000.00 + 12000.00 = 92000.00.
Year 1 owner outlay = 12 × 2022.62 + property tax 4400.00 + insurance 1500.00 + maintenance 4000.00 + HOA 0.00 + PMI 0.00 - tax benefit 0.00 = 34171.41.
Year 1 rent = 12 × 2000.00 + renter's insurance 0.00 = 24000.00; the difference 10171.41 is invested a twelfth at a time at the end of each month at 5%/12.
End of year 1: home 412000.00 - balance 316423.28 - selling costs 24720.00 = owner wealth 70856.72; renter fund 107114.67.
Repeat for each year: value and rent step once a year, tax and maintenance use the start-of-year value, PMI stops once the scheduled balance is at or below 80% of the price (0 months charged).
Owner wealth first meets renter wealth in year 15: 353606.50 vs 349300.74 (year 14: 327680.55 vs 330182.42).
At your 30-year holding period: owner 912650.69, renter 659261.45, difference 253389.24.
Method B user cost = price × [(1 - LTV) × 5% + LTV × 6.5% + tax 1.1% + maintenance/insurance/HOA 1.375% - appreciation 3%] = 22700.00 a year, 1891.67 a month vs rent 2000.00.

Year-by-year comparisontable

year	homeValue	loanBalance	interest	principal	propertyTax	insurance	maintenance	opportunityCost	costOfOwning	rentPaid	ownerOutlay	outlayDifference	ownerWealth	renterWealth	wealthDifference
1	412,000	316,423.28	20,694.69	3,576.72	4,400	1,500	4,000	4,000	34,594.69	24,000	34,171.41	10,171.41	70,856.72	107,114.67	-36,257.95
2	424,360	312,607.02	20,455.15	3,816.26	4,532	1,500	4,120	4,778.84	35,385.99	24,720	34,423.41	9,703.41	86,291.38	122,523.76	-36,232.38
3	437,090.8	308,535.17	20,199.57	4,071.84	4,667.96	1,500	4,243.6	5,587.65	36,198.78	25,461.6	34,682.97	9,221.37	102,330.18	138,227.96	-35,897.79
4	450,203.52	304,190.63	19,926.87	4,344.54	4,808	1,500	4,370.91	6,427.78	37,033.56	26,225.45	34,950.32	8,724.87	119,000.68	154,227.59	-35,226.91
5	463,709.63	299,555.13	19,635.91	4,635.5	4,952.24	1,500	4,502.04	7,300.64	37,890.83	27,012.21	35,225.69	8,213.47	136,331.92	170,522.5	-34,190.58
6	477,620.92	294,609.18	19,325.46	4,945.95	5,100.81	1,500	4,637.1	8,207.73	38,771.09	27,822.58	35,509.31	7,686.74	154,354.49	187,112.12	-32,757.63
7	491,949.55	289,331.98	18,994.22	5,277.19	5,253.83	1,500	4,776.21	9,150.59	39,674.85	28,657.26	35,801.45	7,144.2	173,100.59	203,995.34	-30,894.75
8	506,708.03	283,701.37	18,640.8	5,630.62	5,411.45	1,500	4,919.5	10,130.88	40,602.62	29,516.97	36,102.35	6,585.38	192,604.18	221,170.54	-28,566.36
9	521,909.27	277,693.66	18,263.7	6,007.71	5,573.79	1,500	5,067.08	11,150.33	41,554.91	30,402.48	36,412.28	6,009.8	212,901.06	238,635.5	-25,734.44
10	537,566.55	271,283.6	17,861.36	6,410.06	5,741	1,500	5,219.09	12,210.78	42,532.23	31,314.56	36,731.51	5,416.95	234,028.95	256,387.38	-22,358.42
11	553,693.55	264,444.26	17,432.06	6,839.35	5,913.23	1,500	5,375.67	13,314.15	43,535.11	32,253.99	37,060.31	4,806.32	256,027.68	274,422.65	-18,394.97
12	570,304.35	257,146.86	16,974.02	7,297.39	6,090.63	1,500	5,536.94	14,462.46	44,564.05	33,221.61	37,398.98	4,177.36	278,939.23	292,737.07	-13,797.84
13	587,413.49	249,360.75	16,485.3	7,786.11	6,273.35	1,500	5,703.04	15,657.87	45,619.57	34,218.26	37,747.8	3,529.54	302,807.93	311,325.61	-8,517.69
14	605,035.89	241,053.19	15,963.85	8,307.56	6,461.55	1,500	5,874.13	16,902.64	46,702.17	35,244.81	38,107.1	2,862.29	327,680.55	330,182.42	-2,501.87
15	623,186.97	232,189.25	15,407.48	8,863.94	6,655.39	1,500	6,050.36	18,199.14	47,812.37	36,302.15	38,477.17	2,175.01	353,606.5	349,300.74	4,305.76
16	641,882.58	222,731.68	14,813.84	9,457.57	6,855.06	1,500	6,231.87	19,549.89	48,950.65	37,391.22	38,858.34	1,467.12	380,637.94	368,672.84	11,965.1
17	661,139.05	212,640.72	14,180.45	10,090.96	7,060.71	1,500	6,418.83	20,957.54	50,117.53	38,512.95	39,250.95	737.99	408,829.99	388,289.98	20,540.01
18	680,973.22	201,873.95	13,504.64	10,766.77	7,272.53	1,500	6,611.39	22,424.92	51,313.48	39,668.34	39,655.33	-13.01	438,240.88	408,142.32	30,098.56
19	701,402.42	190,386.11	12,783.57	11,487.84	7,490.71	1,500	6,809.73	23,954.96	52,538.97	40,858.39	40,071.85	-786.54	468,932.17	428,218.84	40,713.33
20	722,444.49	178,128.9	12,014.21	12,257.2	7,715.43	1,500	7,014.02	25,550.82	53,794.47	42,084.15	40,500.86	-1,583.28	500,968.92	448,507.25	52,461.67
21	744,117.83	165,050.81	11,193.32	13,078.09	7,946.89	1,500	7,224.44	27,215.78	55,080.43	43,346.67	40,942.75	-2,403.92	534,419.95	468,993.95	65,426
22	766,441.36	151,096.86	10,317.46	13,953.96	8,185.3	1,500	7,441.18	28,953.35	56,397.28	44,647.07	41,397.89	-3,249.18	569,358.02	489,663.88	79,694.15
23	789,434.6	136,208.38	9,382.93	14,888.48	8,430.85	1,500	7,664.41	30,767.23	57,745.43	45,986.48	41,866.68	-4,119.8	605,860.15	510,500.48	95,359.67
24	813,117.64	120,322.79	8,385.83	15,885.59	8,683.78	1,500	7,894.35	32,661.31	59,125.26	47,366.08	42,349.54	-5,016.54	644,007.79	531,485.54	112,522.25
25	837,511.17	103,373.32	7,321.94	16,949.47	8,944.29	1,500	8,131.18	34,639.74	60,537.15	48,787.06	42,846.88	-5,940.18	683,887.18	552,599.13	131,288.05
26	862,636.51	85,288.71	6,186.8	18,084.61	9,212.62	1,500	8,375.11	36,706.89	61,981.43	50,250.67	43,359.15	-6,891.52	725,589.61	573,819.48	151,770.13
27	888,515.6	65,992.94	4,975.64	19,295.77	9,489	1,500	8,626.37	38,867.39	63,458.4	51,758.19	43,886.78	-7,871.41	769,211.73	595,122.85	174,088.88
28	915,171.07	45,404.89	3,683.37	20,588.05	9,773.67	1,500	8,885.16	41,126.13	64,968.33	53,310.94	44,430.24	-8,880.7	814,855.92	616,483.4	198,372.52
29	942,626.2	23,438.03	2,304.55	21,966.86	10,066.88	1,500	9,151.71	43,488.31	66,511.45	54,910.26	44,990	-9,920.26	862,630.6	637,873.07	224,757.53
30	970,904.99	0	833.39	23,438.03	10,368.89	1,500	9,426.26	45,959.41	68,087.95	56,557.57	45,566.56	-10,991.01	912,650.69	659,261.45	253,389.24

Its 5 worked examples are re-run on every release, last on 15 September 2026. What changed

Sources and references

9 sources

IRS Publication 936 (2025), Home Mortgage Interest Deduction - $750,000 acquisition-debt limit; mortgage-insurance premium deduction expired

2025 returns

IRS, tax year 2026 inflation adjustments (Rev. Proc. 2025-32) - standard deduction $16,100 / $32,200 / $24,150

2026

IRS, correction to the state and local tax deduction amount in the 2026 Form 1040-ES - SALT cap $40,400

2026

CFPB, "When can I remove private mortgage insurance (PMI) from my loan?" - cancellation when the balance is scheduled to reach 80% of original value

CFPB, "Figure out how much you want to spend" - closing costs typically 2% to 5% of the price

OpenStax, Contemporary Mathematics 6.8 The Basics of Loans - level payment formula

Himmelberg, Mayer & Sinai (2005), "Assessing High House Prices", FRB New York Staff Report 218 p. 7 - annual user cost of ownership

2005

Bishop, Dowling, Kuminoff & Murphy (2023), "Tax Policy and the Heterogeneous Costs of Homeownership", NBER WP 31824 eq. 2 - leveraged user cost

2023

FHFA House Price Index (all-transactions, USA) and BLS CPI rent of primary residence - long-run appreciation 4.2%/yr and rent growth 3.9%/yr, cited for the defaults

The 3% appreciation and 3% rent-growth defaults are deliberately conservative assumptions, not sourced constants.

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What this calculator does

How to use Buying Renting Calculator

Enter Purchase price, Down payment, Mortgage rate (APR), Mortgage term, How long you expect to stay, Buyer closing costs, Selling costs, Property tax rate, Homeowner's insurance, Maintenance, HOA or condo fees, Home price appreciation, Rent for a comparable home, Rent growth, Renter's insurance, Return on the renter's investments, PMI rate (if down payment under 20%), Count the federal tax benefit of itemising, Filing status (sets the 2026 standard deduction), Marginal federal tax rate, State and local income tax paid, Other itemised deductions, SALT deduction cap and Mortgage interest deduction debt limit. The calculator checks the values, applies the stated method, and updates the result without saving your figures.

What the result means

The result includes Break-even year, Break-even, Owner wealth at your holding period (net sale proceeds), Renter wealth at your holding period (investment fund), Owner minus renter at your holding period, Monthly mortgage payment (principal and interest), Loan amount, Renter's starting fund (down payment plus closing costs), First-year owner cash outlay, First-year rent, First-year owner outlay minus rent, Months of PMI, Method B: annual user cost of owning, Method B: user cost a month, Method B reading and Year-by-year comparison. Review the visible working and any warnings before using the answer for a decision.

Method and checks

The method cites IRS Publication 936 (2025), Home Mortgage Interest Deduction - $750,000 acquisition-debt limit; mortgage-insurance premium deduction expired; IRS, tax year 2026 inflation adjustments (Rev. Proc. 2025-32) - standard deduction $16,100 / $32,200 / $24,150; IRS, correction to the state and local tax deduction amount in the 2026 Form 1040-ES - SALT cap $40,400, among others. Its 5 built-in worked examples are checked on every full test run. The initial answer and working are rendered on the server, so they remain readable without JavaScript.

Results are general information, not financial, tax, legal, medical or engineering advice. Check any decision that matters with a qualified professional.

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