Rent vs Buy Calculator

In 2026, buying is financially better than renting in most markets if you plan to stay 7+ years, assuming 3–4% annual home appreciation. With mortgage rates at 6.27%, the monthly cost to buy is higher than renting the same home in most cities — but equity buildup and appreciation make buying superior over time. The key exceptions are high price-to-rent ratio markets like San Francisco, New York, and Los Angeles, where renting and investing the difference often beats buying even over 10+ years.

With a 20% down payment, 6.27% mortgage rate, 3.5% home appreciation, and 7% investment return alternative, buying typically breaks even vs renting in approximately 5–8 years in most U.S. markets. In high-cost markets (NYC, SF, LA), break-even extends to 10–15+ years. In affordable markets (Texas, Southeast), break-even can be as short as 3–5 years. The longer you stay, the more buying wins — mostly because appreciation compounds and your mortgage payment stays flat while rent increases.

The price-to-rent ratio is the home price divided by annual rent (or 12× monthly rent). A ratio above 20 generally favors renting; below 15 generally favors buying; 15–20 is a judgment call. Example: a $400,000 home renting for $2,000/month has a ratio of 400,000 / 24,000 = 16.7 — slightly favors buying. A $700,000 home renting for $2,500/month has a ratio of 23.3 — favors renting. This is a rough guide; your actual timeline, appreciation expectations, and opportunity cost matter more.

Renting does not automatically "waste money." When you rent, you get housing value — shelter, location, flexibility. The real question is opportunity cost: is buying a better financial investment than renting and investing the difference? In high price-to-rent markets or if you stay less than 5 years, renting often wins financially. Buying homeowners also pay for mortgage interest (especially in early years), property taxes, maintenance, insurance, and selling costs — none of which build equity. The first 5–7 years of a mortgage mostly pay interest.

Building a new home is a third option that many overlook. In many markets — especially Texas, the Southeast, and the Midwest — building a 2,000 sq ft home costs $224,000–$280,000, comparable to or cheaper than buying a used home of similar size. Building gives you a brand-new home with no deferred maintenance, full customization, and new construction warranty. The main trade-off is time: building takes 9–15 months. If you can afford to wait and have access to land, building is often the best financial option in affordable markets.

Higher mortgage rates significantly raise monthly buying costs — a 1% rate increase on a $350,000 loan adds about $200/month. This shifts the break-even point further out and makes renting more competitive in the short term. However, if rates drop in future years and you refinance, buying becomes more attractive again. Many current buyers plan to "marry the house, date the rate" — buying now with the intention to refinance when rates drop. A locked-in payment also protects against the rent increases that renters face annually.

If there is a significant chance you will move within 3–5 years, renting is almost always the better financial choice. Transaction costs alone (3% buyer + 6% seller agent fees, closing costs, moving costs) total 8–10% of home value — roughly $32,000–$40,000 on a $400,000 home. You need several years of appreciation just to break even on those costs. If you buy in a rising market and sell in 3 years, you might get lucky — but it is financial speculation, not a reliable plan.