Rent vs. Buy Calculator: Find Your Breakeven Year
Published 09/30/2026 by
Andrew Latham
Summary:
Renting and buying can both be the right call, sometimes for the same person at different points in life. What decides it isn’t house prices or mortgage rates on their own. It’s how long you’ll stay, what a comparable home rents for, and what you actually do with the money renting frees up. The calculator below finds your breakeven year from your own numbers and ranks which assumption moves the answer most.
Neither renting nor buying is throwing money away. Rent buys you a place to live and the freedom to leave it. Mortgage interest, property tax, insurance, maintenance and selling costs buy you a place to live plus a slow, leveraged bet on one house in one zip code. Both are real costs.
So the useful question is which set of costs is smaller over the years you’ll actually stay. The answer comes out as a year: the point where buying pulls ahead. Stay past it and buying wins. Leave before it and renting did.
That one input, how long you’ll stay, is where people most often get this wrong. In NAR’s latest buyer and seller profile, sellers had owned their homes for a median of 11 years, an all-time high. Buyers in the same survey said they expected to stay 15.[1] Plans and reality drift apart by years. When you run the calculator, use the number of years you’d bet on, not the number you hope for.
The calculator runs on national defaults and your guesses. If you want the same question answered with your real accounts and credit report, Sense AI in the SuperMoney app can do that. It’ll estimate what a lender is likely to offer you and show which side of the math your situation favors. It takes a few minutes to connect and it’s free for 7 days. Ask Sense AI: should I rent or buy? Sense AI is not a licensed financial advisor.
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How to read your rent vs. buy calculator result
The calculator compares two people who start with the same cash. One buys. The other keeps renting and invests what the buyer spent up front.
Every year, both get marked to market. The owner sells, paying selling costs plus any capital gains tax above the exclusion. The renter cashes out the investment account and pays long-term capital gains tax. Whatever each one walks away with is the net worth line on the chart, and the breakeven year is the first year the owner comes out ahead.
On the defaults (a $440,600 home, $2,320 a month in rent, a 6.69% mortgage rate), that happens at 8.8 years.[2][3][4] At the default 10-year horizon, buying is about $11,800 ahead. That’s a thin margin on a $440,600 decision. Shorten the horizon to 5 years and renting wins. Stretch it to 15 and buying is $77,000 ahead.
The horizon line on the chart marks how long you said you’d stay. The breakeven year alone doesn’t tell you much. What matters is which side of your horizon it lands on.
The honesty slider is the input most calculators skip. Renting only beats buying if the renter invests the difference, and most renters don’t invest all of it. The slider starts at 100%, meaning every dollar the renter saves goes into the investment account. Drop it to 50% and the default breakeven comes 3.6 years sooner. At zero (the renter spends the difference) buying wins in 3.4 years. Set it to what’s true of you, not what flatters you.
The sensitivity list (“what actually moves your answer”) reruns the math with each assumption nudged and ranks them by how far the breakeven year shifts. Read it before you argue with your result. It tells you which single number is worth going out and checking.
What to change first. Three inputs settle most cases: how long you’ll stay, what a comparable home rents for, and the honesty slider. Get those right and everything else is fine-tuning.
The strongest case for buying
Forget “renting is throwing money away.” The real case for buying rests on six things a renter can’t get.
Forced saving. Every mortgage payment retires some principal, whether you feel like saving that month or not. The calculator lets the renter invest the difference with 100% discipline by default, which is generous. Almost nobody does that for 10 straight years. A mortgage doesn’t let you skip a month. (If the early years of a mortgage look like a rip-off to you, here’s why the first three years are so interest-heavy and what that does and doesn’t mean for rent vs. buy.)
Leverage. With 20% down, a 3.5% rise in the home’s value is a 17.5% return on your cash, before costs. No brokerage will lend a regular person 80% of an asset’s value at a fixed rate for 30 years. Leverage cuts both ways (more on that below), but U.S. home prices have grown roughly 4% to 4.5% a year since 1991 on both major national indexes.[5][6] Over the long run, the direction has been up.
A fixed payment while rent climbs. Principal and interest on a 30-year fixed loan are the same in year 25 as in year one. Rent isn’t. The calculator’s default grows rent 3% a year, and Zillow’s single-family rent index rose exactly 3.0% in the year to June 2026.[3] In year one, owning costs more per month than renting. That gap shrinks every year, though, because the rent keeps rising and your loan payment doesn’t. Eventually the owner is paying yesterday’s prices while the renter pays today’s.
The capital gains exclusion. Sell your main home and the first $250,000 of profit is tax-free ($500,000 on a joint return), as long as you owned it and lived in it for two of the last five years.[7] The renter’s investment gains get no such break, and the calculator taxes them on the way out. Over a decade of appreciation on a median-priced home, that’s real money.
Control and stability. No landlord can decline to renew, sell the building out from under you, or push the rent to whatever the market will bear. You can paint, renovate, get a dog, and plan around a school district for ten years. The calculator values this at zero because it can’t price it. You can.
An inflation hedge. A 30-year fixed mortgage is a fixed-dollar debt. If inflation runs hot, wages and rents go up and your payment doesn’t, so you repay the loan in cheaper dollars. Few ordinary households have a better hedge than that.
When this case wins: you’ll stay well past the breakeven year, rent is expensive relative to prices in your market, and you know yourself well enough to admit you wouldn’t invest the difference. On the defaults with the honesty slider at zero, buying wins in 3.4 years.
The strongest case for renting
This one isn’t “prices are too high,” either. It’s six costs that buyers pay without always noticing, and the calculator puts every one of them on the table.
Mobility. A renter can take the better job in another city, move in with a partner, or downsize after a divorce with 30 to 60 days’ notice. An owner can do all that too, after paying a commission, transfer taxes, and maybe a few months of carrying two homes. Sellers in the NAR profile stayed a median of 11 years, and the default breakeven is 8.8. Very few 30-year-olds know where they’ll be at 38.
The down payment’s opportunity cost. Twenty percent of $440,600 is $88,120, plus roughly $13,000 in closing costs. The renter keeps that money invested. At the default 5% return it compounds quietly every year. Bump the return to 7%, closer to long-run stock returns, and the default breakeven jumps from 8.8 years to 16.5, with renting $27,500 ahead at year 10. The buyer’s leverage is real. So is the renter’s compounding.
Transaction costs. The defaults charge 3% to buy and 8% to sell, so one round trip costs 11% of the home’s value. That’s not padded. Total agent commissions averaged 5.46% in Clever Real Estate’s August 2026 agent survey.[8] Buyer closing costs typically run 2% to 5%, per Freddie Mac.[9] Title, escrow and transfer taxes on the sale add another 1% to 4% depending on your state.[10] On a $440,600 home, 11% is about $48,000. That’s why a two-year stay almost never pays off.
Maintenance and insurance shocks. The 1% maintenance rule is an average. In real life it shows up as a $14,000 roof one year and nothing for the next three. Insurance is its own problem: average homeowners premiums rose 46% from 2021 to 2025, to about $2,950 a year, according to Insurify.[11] In some states, like California, major insurers have pulled back from writing new policies at all. A renter’s exposure to all of this is zero. The landlord’s cost is baked into the rent, but it’s smoothed out, not lumpy.
Concentration. Buying puts most of a household’s net worth into one leveraged asset in one neighborhood. The renter’s portfolio can own the whole world. The calculator’s flat-prices scenario shows what happens when that one bet doesn’t pay: at 0% appreciation, breakeven stretches to 24.8 years.
The tax break most owners never see. Mortgage interest and property tax only help if you itemize, and only by the amount that clears the standard deduction. For 2026, that’s $32,200 on a joint return.[12] On the defaults, first-year interest plus property tax on a $440,600 home comes to roughly $28,000. It doesn’t clear the bar, so the tax benefit is zero. That’s normal. Only 9.5% of returns itemized in 2022, down from 30.6% in 2017 before the tax law changed.[13] The calculator only counts savings above the standard deduction, which is why “the tax benefits of owning” so often come to nothing.
When this case wins: you might move before the breakeven year, rent is cheap relative to prices where you live, the down payment would drain your emergency fund, and you really would invest the difference. On the defaults with a 2-year horizon, renting is $43,600 ahead.
The five things that actually decide it
Everything else is fine-tuning. These five move the answer, and the sensitivity list shows you by how much.
1. How long you’ll stay
Your horizon doesn’t move the breakeven year. It decides which side of it you land on. A round trip of about 11% has to be earned back before buying can win, and on the defaults that takes 8.8 years. So ask yourself the way an actuary would: what are the odds I’m still in this home in year 9? If it’s less than a coin flip, the rest of the math barely matters.
Lever: Years you think you’ll stay.
2. The price-to-rent ratio
Divide the home’s price by a year of rent on a comparable place. On the defaults, $440,600 against $27,840 a year in rent gives you 15.8. Under about 15 tends to favor buying. Over about 20 tends to favor renting. In between, the other inputs decide.
The two scenarios below that swing the answer hardest are both price-to-rent changes. If the median home rents for $3,300 a month (a ratio of 11), buying wins in 3 years. An $800,000 home that rents for $2,800 (a ratio of 24) keeps renting ahead for all 30 years.
Levers: Home price and Monthly rent for a comparable home.
3. Appreciation vs. investment return
This is the biggest lever on the sensitivity list. One percentage point of home price growth, up or down, moves the default breakeven by 5.6 years. One point on the investment return moves it 2.2.
The default of 3.5% blends two things. Fannie Mae’s Home Price Expectations Survey panel expects roughly 2% to 3% a year through 2028,[14] and both national indexes have averaged about 4.3% a year since 1991. Forecasters disagree a lot about the next few years, so this is the assumption most worth replacing with your own view. The chips under the verdict let you try all three.
Levers: Home price growth and Investment return.
4. Whether you’d really invest the difference
Investing half of what renting saves, instead of all of it, pulls the default breakeven in by 3.6 years. That’s a bigger swing than a half-point change in your mortgage rate. Here the calculator stops being arithmetic and becomes a question about you.
If your savings rate hasn’t moved in three years, your honest slider setting is low, and buying looks better. If you already invest automatically every month, it’s high, and renting looks better.
Lever: The honesty slider.
5. Transaction costs
Two points on selling costs move the default breakeven 1.3 years. Sounds small. But it’s the one lever you can actually negotiate. Commissions have always been negotiable, and the 2024 NAR settlement made it easier to push on them. In a strong market, a flat-fee or discount listing can bring selling costs from 8% down toward 5%. The costs are paid once, and every extra year you stay spreads them thinner.
Lever: Selling costs (% of sale).
Should I rent or buy? Who each choice fits
None of these rows is a verdict. They’re the situations that push the breakeven year one way or the other, plus the input to check.
| Your situation | Leans | What to check |
|---|---|---|
| You could plausibly move within five years | Rent | Set the horizon to the years you’d bet on, not hope for |
| Stable income and you expect to stay 10+ years | Buy | Horizon at 10+; make sure breakeven lands comfortably inside it |
| A comparable home rents for less than 5% of its price per year | Rent | Price-to-rent above 20; try the $800k / $2,800 scenario |
| Rent is 7% or more of the home’s price per year | Buy | Price-to-rent under 15; try the $3,300 rent scenario |
| The down payment would empty your emergency fund | Rent, for now | Run 5% down and watch PMI push breakeven past 14 years |
| You have the down payment, but your savings rate hasn’t budged in years | Buy | Honesty slider at 25% or lower |
| You already invest automatically every month | Could go either way | Slider at 100% and investment return at your real long-run rate |
| Variable income, or your job is one reorg away from moving | Rent | Horizon at 3; look at the year-3 row of the table |
| You’re counting on refinancing when rates fall | Buy, carefully | Turn on the refi scenario. A 5.5% refi in year 3 pulls breakeven to 7.5 years. Helpful, not magic. |
| Local prices have been flat for years | Rent | Home price growth at 0% to 2%; at 0%, breakeven is 24.8 years |
If two rows in that table fit you and point in opposite directions, the table can’t settle it. Your actual balances, income and credit file can. Ask Sense AI: should I rent or buy?
Try it with someone else’s numbers
Each scenario below reloads the calculator with one or two inputs changed from the defaults, so you can see what a different life does to the answer. Three favor buying, three favor renting. That’s the point.
- A two-year job posting. Everything at the defaults except a 2-year horizon. Renting is $43,600 ahead at year 2, and buying doesn’t catch up until 8.8 years. Transaction costs do most of the damage here.
- Rent is expensive for a median home. Same $440,600 house, but a comparable rental costs $3,300 a month (price-to-rent of 11). Buying pulls ahead at 3.0 years and is $180,000 ahead by year 10.
- Cheap to rent, expensive to buy. An $800,000 home that rents for $2,800, a ratio of 24 that’s common in coastal metros. Renting stays ahead for the full 30 years and leads by $170,000 at year 10.
- Five percent down, staying seven years. A smaller down payment means PMI and a bigger loan. Renting is $48,500 ahead at year 7, and breakeven moves out to 14.7 years.
- The renter who spends the difference. Honesty slider at zero. Buying wins in 3.4 years. Now flip it: the same renter invests every dollar at 7%. Renting is $27,500 ahead at year 10 and breakeven is 16.5 years. Same house, same rent, opposite answer.
- Flat home prices. Appreciation at 0%. Breakeven moves to 24.8 years and renting is $129,000 ahead at year 10. This is what leverage costs you when the asset doesn’t move.
Rent vs. buy FAQs
Is it better to rent or buy a house?
Three things matter more than anything else: how long you’ll stay, what a comparable home rents for relative to its price, and whether you’d invest what renting saves you. Stay past the breakeven year the calculator shows and buying usually wins. Leave before it and renting usually does. The other inputs shift the breakeven by a few years either way, and the sensitivity list shows which ones matter for your numbers.
What is the 5% rule in rent vs. buy?
Portfolio manager Ben Felix popularized it in 2019.[15] It estimates the unrecoverable costs of owning at about 5% of the home’s value per year: roughly 1% property tax, 1% maintenance, and 3% cost of capital (your mortgage interest plus the return you give up on your equity). If a comparable home rents for less than 5% of its price per year, renting is the cheaper way to live there.
It’s a quick screen, not a full answer. It ignores transaction costs, your horizon and taxes, which this calculator includes. On the defaults, a year of rent is 6.3% of the price, so the rule leans toward buying. The calculator agrees, but only after 8.8 years.
What is the 2% rule?
It’s a screen for rental property investors, not for deciding whether to rent or buy your own home.[16] It says a rental is worth a closer look if the monthly rent is at least 2% of the purchase price. Very few markets clear that bar today. On the defaults, monthly rent is about 0.5% of the price. If someone brings up the 2% rule in a rent-vs-buy argument, they’ve borrowed it from the wrong decision.
Why are more millionaires renting?
The headline comes from a 2025 RentCafe analysis of Census data, and it measures income, not net worth. Renter households earning over $1 million a year rose from about 4,500 in 2019 to 13,700 in 2023.[17] That’s fast growth from a tiny base, and high-income owner households still outnumber them about ten to one.
Why it happens at all goes back to the renting case above. In the metros where these households live, price-to-rent ratios are high, so renting the same home costs far less than owning it and the difference can be invested. It shows renting can be the wealthier choice in expensive markets. It doesn’t show that it is in general.
How long do you need to stay for buying to win?
On the national defaults, 8.8 years. Where rent is expensive relative to prices, it can be under 3. Where prices are high relative to rent, buying may never catch up inside 30 years. The number swings so much with your inputs that the only useful answer is the one the calculator gives you for your home, your rent and your horizon.
Methodology
Both tracks are marked to market every year. The owner sells, paying selling costs and capital gains tax above the $250,000 / $500,000 exclusion. The renter, who started with the cash the buyer spent up front, liquidates an investment account taxed at the long-term capital gains rate. Each month, whichever side is cheaper invests the difference in its own account, with the renter’s contribution scaled by the honesty slider.
Tax savings from itemizing count only above the standard deduction. State and local taxes are capped, and mortgage interest is deductible on the first $750,000 of the loan.[18] The tool uses the $40,000 SALT cap that applied for 2025. The 2026 cap is $40,400, a difference too small to change any result on this page. PMI applies below 20% down and ends automatically when the loan reaches 78% of the home’s original value, as federal law requires.[19]
Defaults use June 2026 national data (NAR median existing-home price, Zillow single-family rent) and the Freddie Mac 30-year fixed rate from early August 2026 (6.69%). Rates have risen since, to a 7.03% average on September 24,[4] so type in the rate you’ve actually been quoted. The full methodology, including the sources behind the home price growth default, is in the drawer at the bottom of the calculator.
SuperMoney may be compensated by some of the lenders listed on this site. This doesn’t change how we evaluate them. Figures are as of September 2026 and can change, so check the sources before you act.
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Key takeaways
- On national defaults, buying pulls ahead of renting at 8.8 years. Whether your horizon falls before or after that point decides the case.
- Three inputs settle most cases: how long you’ll stay, your market’s price-to-rent ratio, and whether you’d really invest what renting saves.
- Buying brings forced saving, leverage, a fixed payment and a tax-free gain on sale. Renting brings mobility, a compounding down payment, and no 11% round trip in transaction costs.
- Sellers stay a median of 11 years, but buyers expect to stay 15. Plan on the shorter number.
- For most households the mortgage tax deduction is worth nothing: only 9.5% of returns itemized in 2022.
Andrew is the Content Director for SuperMoney, a Certified Financial Planner®, and a Certified Personal Finance Counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.
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