Rent vs. Buy Calculator
Compare the long-term financial impact of renting versus owning a home.
Estimated monthly payments include principal and interest and are not an offer to lend. Tax, insurance, and other fees and charges may apply. Default interest rate displayed is illustrative only. Interest rates, total cost of mortgage, and monthly mortgage payment are estimates based on information provided. Actual mortgage payment and interest rate may be higher or lower than those displayed and will depend on your mortgage product, collateral, and credit history.
Crunch your own numbers with our mortgage calculators for refinance or a purchase loan, and run as many different scenarios as you’d like.
What it Shows
• Potential break-even year for homeownership
• Projected equity accumulation and home appreciation impact
• Long-term housing cost comparisons based on your inputs
What it Doesn't
• Future home values or rent increases with certainty
• Guaranteed financial outcomes or investment returns
• Mortgage approval or lending decisions
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How the Rent vs. Buy Calculator Works
Choosing whether to rent or buy involves more than comparing a mortgage payment to monthly rent. Both options come with unique costs, benefits, and long-term financial considerations.
What the Calculator Compares
This calculator compares the estimated cost of renting with the estimated cost of homeownership over time.
Inputs may include:
- Home purchase price
- Monthly rent
- Down payment
- Mortgage rate
- Property taxes
- Homeowners insurance
- Maintenance costs
- Home appreciation assumptions
- Rent growth assumptions
The goal is to estimate which option may result in lower overall housing costs over your expected ownership period.
Why the Break-Even Year Matters
One of the most important outputs is the break-even year.
The break-even year represents the point at which the total cost of owning becomes less than the total cost of renting. Before reaching that point, renting may be less expensive. After reaching it, buying may provide greater financial benefits through equity growth and appreciation.
For many borrowers, the decision comes down to whether they expect to remain in the home long enough to reach that break-even point.
Should You Rent or Buy?
There is no universal answer to the rent-versus-buy decision. The right choice depends on your finances, lifestyle, housing market, and expected length of stay.
Current 2026 Housing Market Snapshot
Today’s housing market continues to present buyers and renters with different opportunities and tradeoffs.
Mortgage rates, home prices, rent growth, inventory levels, and local market conditions can all influence whether renting or buying makes more financial sense at a particular point in time.
Because conditions vary significantly from one market to another, personalized calculations are often more helpful than national averages.
Buying can make more sense when:
- You plan to stay for several years
- You can comfortably afford ownership costs
- You want to build home equity
- You expect stable housing needs
- Local ownership costs compare favorably to rent
Over time, home appreciation and mortgage principal repayment may help offset ownership costs and create long-term value.
How to Use the Rent vs. Buy Calculator (Step-by-Step)
Inputs You'll Need
To compare renting and buying accurately, gather information such as:
- Monthly rent
- Expected rent increases
- Home purchase price
- Down payment
- Mortgage rate
- Property taxes
- Homeowners insurance
- Maintenance costs
- Expected length of stay
Using realistic assumptions may help produce more meaningful results.
Understanding Your Results
The calculator evaluates:
- Break-even year
- Cost of renting
- Cost of owning
- Equity accumulation
- Home appreciation impact
- Opportunity cost
- Long-term financial differences
Reviewing all results together can provide a more complete picture than comparing monthly payments alone.
Price-to-Rent Ratio: The Market-Level Test
A useful way to compare renting and buying is by evaluating the price-to-rent ratio.
How to Calculate Price-to-Rent Ratio
The price-to-rent ratio is calculated by dividing a home’s purchase price by one year’s worth of rent for a similar property.
Formula: Home Price ÷ Annual Rent = Price-to-Rent Ratio
This metric provides a quick way to evaluate whether buying or renting may be more economically attractive in a particular market.
What Different P/R Ratios Mean
Below 15 — Buying generally becomes more attractive.
15-20 — The market may be balanced between renting and buying.
Above 20 — Renting may offer a stronger financial advantage, depending on individual circumstances.
The ratio is not a replacement for a full analysis, but it can provide a helpful starting point.
The True Cost of Buying (Beyond the Mortgage Payment)
Buying a home involves more than principal and interest payments.
One-Time Costs (Down Payment, Closing, Points)
Common upfront ownership expenses include:
- Down payment
- Loan origination fees
- Discount points
- Appraisal fees
- Title services
- Closing costs
These expenses can represent a significant initial investment and may affect your break-even timeline.
Recurring Costs (PITI, HOA, Maintenance, PMI)
Ongoing ownership expenses may include:
- Principal
- Interest
- Property taxes
- Homeowners insurance
- HOA dues
- Maintenance
- Mortgage insurance
These costs should be included when evaluating the full cost of homeownership.
Exit Costs (Selling Commission, Capital Gains)
When it’s time to sell, homeowners may also face:
- Real estate commissions
- Closing costs
- Moving expenses
- Potential tax considerations
These costs can influence how long ownership must be maintained to become financially beneficial.
The True Cost of Renting
Renting may appear simpler, but it also involves costs that can increase over time.
Rent Inflation and Lease Renewal Increases
Rental payments often increase over time due to market conditions, inflation, and lease renewals.
As rents rise, the long-term cost of renting may become more expensive than initially expected.
Renter's Insurance and Security Deposits
Renters may also incur expenses such as:
- Security deposits
- Application fees
- Pet fees
- Renter's insurance
While typically smaller than homeownership costs, these expenses should still be considered when making comparisons.
Glossary
Every input and output the calculator uses, explained in plain terms.
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Answer a few questions to compare renting versus buying, estimate your break-even point, and understand how ownership costs may fit into your long-term financial goals.
Frequently Asked Questions
What is a rent vs. buy calculator?
A rent vs. buy calculator compares the estimated costs of renting and homeownership over time. It can help you understand how factors like home price, rent, down payment, mortgage costs, and length of stay may affect your decision
Is it cheaper to rent or buy a home?
The answer depends on factors such as local housing costs, interest rates, rent prices, and how long you plan to stay in the home. A rent vs. buy calculator can help you compare the potential costs of each option based on your situation
How long should I plan to stay in a home before buying makes sense?
There is no set timeframe that applies to everyone. The financial benefits of homeownership depend on factors such as home prices, closing costs, monthly housing expenses, and local market conditions. A rent vs. buy calculator can help estimate when buying may become more cost-effective than renting
What costs should I consider when buying a home?
In addition to your mortgage payment, property taxes, homeowners insurance, maintenance, utilities, and closing costs. Understanding the full cost of ownership can help you make a more informed decision
Can buying a home help build equity?
As homeowners make mortgage payments, they may build equity in their property over time. Changes in home value can also affect the amount of equity available. However, housing markets can fluctuate, and future results are not guaranteed.
Should I rent or buy?
The right choice depends on your financial goals, lifestyle, housing needs, and future plans. Renting may offer flexibility, while buying may provide long-term stability and the opportunity to build equity. A loan officer can help you evaluate your options and determine what may make the most sense for your situation
*loanDepot Lifetime Guarantee is non-transferable and does not apply to loans obtained to purchase a new property, new loans that result in the creation of a separate lien on the current property (i.e., a “home equity loan”), renovation loans, bond loan programs, and down payment assistance programs. “Lender fee” does not include discount points associated with the loan transaction nor does it include fee associated with third-party closing costs. Terms and conditions apply. Please refer to the website: http://www.loanDepot.com/lifetime-guarantee for the most current terms and conditions as they are subject to change without notice.