How to use this calculator
- Enter the price you’d pay, your down payment and the mortgage rate from your quote, and how fast you expect the home’s value to grow.
- Enter the monthly rent for a home like this one and how fast you expect it to rise. Use the same growth for both to keep the price-to-rent ratio where it starts.
- Set how many years you expect to stay, what your investments would earn, your filing status and your income. The income decides whether itemizing beats the standard deduction.
- Under More options, replace the national defaults with your own property tax, insurance, HOA dues, closing costs and cost to sell, and add any state and local income tax, gifts to charity or a state tax rate.
- Read the break-even rent: if a similar home rents for less, renting comes out ahead at your stay. The chart shows every year from 1 to 30, so you can see how the answer changes with the stay.
The numbers already filled in are an example. Replace them with your own.
How it's calculated
Two households spend the same cash every month. The buyer pays the mortgage, any mortgage insurance, property tax, insurance, HOA dues and upkeep; the renter pays rent and renters insurance. Whichever pays less that month invests the difference, and the renter starts by investing the down payment and closing costs the buyer spent. The investments earn your return, compounded monthly.
Each year the buyer’s federal income tax is worked out on two whole returns, one renting and one owning, and the difference is the tax owning saves; the buyer invests it. Owning adds mortgage interest, property tax and mortgage insurance premiums to Schedule A, so it saves tax only when the itemized total beats the standard deduction, and only by the amount it beats it.
At the end of your stay the home is sold: its value, less the cost to sell, less the loan still owed, plus the buyer’s investments. The home-sale exclusion covers up to $250,000 of the gain ($500,000 joint) after two years; investment gains are taxed at capital gains rates, with the net investment income tax where it applies. The renter cashes out the investments and pays the same kinds of tax.
An example
A $370,000 home with $37,000 down at 7.25% costs $3,121.25 in the first month: $2,271.65 of principal and interest, $122.10 of estimated mortgage insurance, $274.42 of property tax, $144.75 of insurance and $308.33 of upkeep. Renting a similar home costs $1,814.42, so the renter invests the difference. Owning saves $2,794 of federal income tax in year 1 for a single filer earning $80,000.
After 10 years, selling leaves the buyer $217,434: a home worth $502,098, less $27,113 to sell and $287,413 still owed, plus $31,597 invested, less $1,735 of tax. The renter has $267,301 after tax. Renting leaves $49,868 more, and the two come out about even at a rent of $2,068 a month.
Assumptions and limits
- You sell or move out on December 31 of the last year you stay, and the comparison is what each path leaves you then, after selling, paying off the loan and paying federal tax on the gains. Year 1 starts in January of the first tax year you pick; buying later in a year shifts every figure by up to a year. A home you keep is worth more to you than its sale price net of costs; this counts what you could walk away with.
- Both paths spend the same cash each month. Whichever costs less invests the difference at your investment return; the renter invests the down payment and closing costs on day one. With “Invest each month’s difference” off, the savings are spent.
- The loan is a fixed-rate conventional mortgage, with its first payment in the month you buy. FHA, VA, adjustable rates, points, extra payments and refinancing are not modeled; the mortgage calculator prices FHA and VA loans. Above the conforming limit, mortgage insurance and down payment rules differ from the estimate.
- Mortgage insurance is Fannie Mae’s estimate by down payment unless you enter a quote, and runs until the automatic end the Homeowners Protection Act sets, if you’re current on the payments: 78% of the price on the original schedule, or halfway through the term. Asking to cancel at 80%, or a new appraisal after prices rise, can end it sooner; this assumes neither.
- Property tax follows the home’s value each January, unless you turn on the yearly cap under More options. With it on, the assessed value starts at the price and rises each year by the lesser of the cap and the inflation you enter, never above the home’s value, the way California’s Proposition 13 works (2% a year there). Exemptions, voter-approved bonds outside the cap and reassessment after new construction are left out.
- Upkeep is a share of the price, rising with inflation. 1% a year is a planning convention, not a measured figure; the American Housing Survey’s 2023 median routine maintenance for owner-occupied homes was $500 a year, which counts only routine work and leaves out roofs, furnaces and other replacements.
- Home insurance, HOA dues, renters insurance, your income and the deductions you enter rise with inflation. Rent rises at the rent growth you enter, once a year. Home insurance is a national average at any price unless you enter a quote.
- Home value growth and rent growth are your estimates. Both default to 3.1% a year, so the price-to-rent ratio stays where it starts: the long-run national record of home prices after inflation (Robert Shiller’s series, 1890 to 2026) plus 2.5% inflation. Over recent decades home prices have outgrown rents, so this is a choice, not the record. A national index describes no single home or market, and a price index is not a total return.
- The cost to sell defaults to 5.4%, twice the Federal Reserve’s estimate of the average buyer’s agent commission, about 2.7%. Those figures are for 2023, before the August 2024 changes to how buyers’ agents are paid; commissions are negotiable, so enter what your agent quotes, plus any transfer tax.
- Closing costs to buy default to the 2025 median lender and title charges on a 30-year conventional purchase loan with no points, rounded up for recording fees. Transfer taxes, prepaid interest and escrow deposits are not in it. None of it is added to the home’s tax basis, because charges for a loan are not basis; owner’s title insurance and transfer taxes are, so the taxable gain on a sale can be slightly high.
- Federal income tax is worked out each year on two whole returns, renting and owning, from your filing status and income, with the standard deduction or itemized deductions, whichever is larger: property tax within the limit on state and local taxes (and its drop to $10,000 in 2030), mortgage interest within the $750,000 limit, mortgage insurance premiums from 2026 with their income phase-out, and cash gifts to charity. You and any spouse are taken to be under 65 throughout, with no other income, credits or adjustments, and the alternative minimum tax is not figured. Tax figures after the newest published year are estimates that grow with the inflation you enter; the law uses a different price index and rounds them down. Married filing separately assumes you own and pay for the home alone.
- At the sale, up to $250,000 of the home’s gain ($500,000 joint) is excluded after two years; the rest, and the investments’ gains, are taxed at capital gains rates (ordinary rates within a year), plus the 3.8% net investment income tax where it applies. The investments are assumed to pay no taxable dividends or interest while held, which favors whichever side invests more. A state rate, if you enter one, applies to the same gains.
- Left out on both sides: utilities, the security deposit, moving costs, local income tax on the gains when you sell, and the value of staying put or of being free to move.
- The default price, rent and income are the 2025 American Community Survey’s median owner-occupied home value ($371,100), median rent for a three-bedroom home with utilities ($1,760) and median household income ($84,780), rounded; the rate is Freddie Mac’s weekly survey average for 30-year loans in late October 2026, to the nearest eighth. Use your own.
Input field details
What to enter in each box, where to find the number, and how this calculator treats it. When two calculators give different answers from the same numbers, it's usually because they handle one of these differently.
Home price
The price you’d pay for the home.
Where to find itThe listing, or the offer you plan to make.
How this tool treats itThe price is the home’s value on the day you buy, and its tax basis when you sell. It is also the base for upkeep and, through the loan, for mortgage insurance.
Allowed range$10,000 to $20,000,000
Down payment
The cash you’d put toward the price, in dollars.
Where to find itYour savings, less what you’ll keep for closing costs and reserves.
How this tool treats itThe loan is the price minus the down payment. If you rent instead, the down payment and the closing costs stay invested at your investment return from the first day. At or above the price there’s no loan.
Allowed range$0 to $50,000,000
Mortgage rate
The interest rate on the loan, to three decimals (7.25 or 6.875). Not the APR.
Where to find itThe Loan Estimate, page 1, "Interest Rate", or a lender’s quote.
How this tool treats itA fixed rate for the whole term. Each monthly payment pays a twelfth of the rate on the balance first, rounded to the cent, and the rest lowers what you owe. Only that principal is something you keep.
Allowed range0% to 20%
Not includedAdjustable rates, points, extra payments and refinancing.
Home value growth a year
How much you expect the home’s value to change each year, as a percentage. It can be negative.
How this tool treats itThe value grows once a year from the price. The default, 3.1%, is the long-run growth of U.S. home prices after inflation in Robert Shiller’s series (1890 to 2026), about 0.57% a year, plus 2.5% inflation. A national index describes no single home or market, and a price index is not a total return.
Allowed range−10% to 10% a year
Monthly rent for a similar home
What a home like this one would rent for each month.
Where to find itListings for similar homes nearby, or your current lease if it is a fair match.
How this tool treats itRent stays the same for 12 months and rises once a year, each January, by the rent growth you set. The default, $1,800, is the median gross rent of a three-bedroom home in the 2025 American Community Survey, rounded; gross rent includes utilities, which this leaves out on both sides.
Allowed range$0 to $100,000 a month
Rent growth a year
How much you expect the rent to change each year, as a percentage. It can be negative.
How this tool treats itThe default equals the home value growth default, so the price-to-rent ratio stays where it starts. That is a choice: over the long record home prices have grown faster than rents.
Allowed range−10% to 10% a year
Years you’ll stay
How many years you expect to live in the home before selling or moving.
How this tool treats itThe comparison is what each path leaves you on December 31 of your last year: for buying, the sale price less the cost to sell, the loan still owed and the tax on the gain, plus anything invested; for renting, what was invested, less the tax on its gains. Buying in another month shifts every figure by up to a year.
Allowed range1 to 30 years
Investment return a year
The yearly return, before tax, on money you’d invest instead of putting into the home.
How this tool treats itCompounded monthly, at a twelfth of the yearly rate. With "Invest each month’s difference" on, whichever path costs less each month invests the difference, and the owner invests each year’s tax saving at the end of the year. The investments pay no taxable dividends or interest while held; their gains are taxed when you sell or move.
Allowed range0% to 20% a year
Filing status
The status you file your federal return under.
Where to find itThe top of page 1 of your Form 1040.
How this tool treats itIt sets the standard deduction, the tax brackets, the home-sale exclusion ($500,000 joint, $250,000 otherwise) and the mortgage debt limit ($375,000 married filing separately, $750,000 otherwise). Married filing separately assumes you own and pay for the home alone.
Not includedA home owned jointly by spouses filing separately, and filers 65 or older.
Household income a year
Your yearly income before tax; on a separate return, your own.
Where to find itWages and other ordinary income: Form W-2 box 1, or last year’s Form 1040.
How this tool treats itIt rises with inflation each year. It decides how much itemizing saves you, and the tax rate on the gains when you sell.
Allowed range$0 to $10,000,000 a year
Loan term
How many years the loan runs.
How this tool treats itAfter the last payment you pay no principal or interest, so the owner’s monthly cost drops for the rest of the stay.
Allowed range10, 15, 20, 25 or 30 years
Property tax a year
The yearly property tax as a percentage of the home’s value, or of its assessed value if your state caps assessment increases.
Where to find itThe listing’s tax bill or your county assessor: divide the yearly bill by the home’s value (by the assessed value with a cap; in the first year that is the price).
How this tool treats itApplied each January to the home’s value then, a twelfth a month, so it follows the value up or down. If your state limits how fast the assessed value can rise, turn on the cap below.
Allowed range0% to 5% a year
My state caps yearly increases in the assessed value
Turn it on if your state limits how much the assessed value of a home can rise each year, as California’s Proposition 13 does.
How this tool treats itThe assessed value starts at the price. Each year it may rise by at most the lesser of the cap and the inflation you enter, the way California’s rule takes the lesser of 2% and its price index, and it never goes above the home’s value. Property tax is the rate times the assessed value.
Not includedExemptions such as a homestead exemption, special assessments and bonds voted outside the cap, and a reassessment after a change in ownership or new construction. Where a state applies its cap to last year’s assessed value rather than to the price, the result differs only after the home’s value falls.
Yearly cap on the assessed value’s increase
The most the assessed value may rise in a year, as a percentage.
Where to find itYour state or county assessor. California’s is 2% (Revenue and Taxation Code section 51).
How this tool treats itUsed only when the cap is on. The default, 2%, is California’s.
Allowed range0% to 10% a year
Home insurance a year
The yearly homeowners insurance premium.
Where to find itAn insurance quote for this home.
How this tool treats itA twelfth a month, rising with inflation. The default, $1,737, is a national average premium (NAIC, data for 2023) at any price.
Allowed range$0 to $100,000 a year
HOA dues a month
The monthly homeowners association dues, if the home has them.
Where to find itThe listing or the association.
How this tool treats itThey rise with inflation each year.
Allowed range$0 to $20,000 a month
Upkeep a year
What you expect to spend on repairs and maintenance each year, as a percentage of the price.
How this tool treats itA share of the price, not of the home’s later value, rising with inflation. 1% a year is a planning convention, not a measured figure; the Census Bureau’s American Housing Survey put the 2023 median routine maintenance for owner-occupied homes at $500 a year, which leaves out roofs, furnaces and other replacements.
Allowed range0% to 5% a year
Closing costs to buy
The closing costs of buying, in dollars, without the down payment, prepaid interest or escrow deposits.
Where to find itThe Loan Estimate, page 2: sections D (total loan costs), E (taxes and other government fees) and H (other).
How this tool treats itPaid on the day you buy and not recovered. If you rent instead, this money is invested. None of it is added to the home’s tax basis, because charges for a loan are not basis; owner’s title insurance and transfer taxes are, so the taxable gain can be slightly high. The default, $5,000, is the 2025 median of lender and title charges on 30-year conventional purchase loans with no points, rounded up for recording fees.
Allowed range$0 to $1,000,000
Cost to sell
What selling will cost, as a percentage of the sale price: enter what your agent quotes, and add any transfer tax and other seller costs.
How this tool treats itThe default, 5.4%, is twice the Federal Reserve’s estimate of the average commission advertised to buyers’ agents, about 2.7%, for listings before the August 2024 changes to how buyers’ agents are paid. Commissions are negotiable. The cost to sell lowers the amount realized, and so the taxable gain.
Allowed range0% to 20% of the sale price
I have a mortgage insurance quote
Tick it if a lender has quoted you a private mortgage insurance rate for this loan.
How this tool treats itPrivate mortgage insurance applies when the loan is above 80% of the price. Without a quote, its rate is estimated from the down payment: 0.44% of the loan a year with 10% down or more, 0.62% with 5%, and 1.10% below 5%, the rates Fannie Mae uses in its consumer estimates. It is charged monthly on the original loan until the payment that brings the scheduled balance to 78% of the price, or halfway through the term if that comes first (12 U.S.C. 4902).
Not includedAsking to cancel at 80%, or a new appraisal after prices rise, either of which can end it sooner; FHA and VA loans.
Mortgage insurance, % of the loan a year
The yearly premium rate from your quote, as a percentage of the loan.
Where to find itThe lender’s quote, or the monthly "Mortgage Insurance" on page 1 of the Loan Estimate: times 12, divided by the loan amount.
How this tool treats itRead only when the down payment is under 20% and you’ve ticked the quote box. A real premium depends on your credit score and the insurer.
Allowed range0% to 3% a year
Renters insurance a year
The yearly renters insurance premium.
Where to find itA quote, or your current policy.
How this tool treats itA twelfth a month, rising with inflation. The default, $173, is a national average premium (NAIC, data for 2023).
Allowed range$0 to $10,000 a year
Inflation
The yearly inflation rate you expect.
How this tool treats itIt raises home insurance, HOA dues, upkeep, renters insurance, your income and the deductions you enter each year, and the tax brackets and standard deduction for years after the newest published tax year. The law indexes those to a different price measure and rounds them down, so the later years’ tax figures are estimates. With "Show in today’s dollars" on, figures for a later year are divided by this inflation.
Allowed range0% to 10% a year
State and local income tax you pay in a year
The state and local income tax you pay in a year, or the general sales tax you’d deduct instead.
Where to find itYour state return, or the state and local tax withheld on your W-2s (boxes 17 and 19).
How this tool treats itIt counts toward the limit on deducting state and local taxes, together with property tax, on both returns. The limit is $40,400 in 2026 (half on a separate return) and phases down at high incomes; it is estimated at 101% of the year before for 2027 to 2029, and falls to $10,000 from 2030.
Allowed range$0 to $1,000,000 a year
Cash gifts to charity a year
Cash you give to public charities each year, not to a donor-advised fund.
Where to find itYour receipts or bank records.
How this tool treats itOn both returns. If you itemize, gifts above 0.5% of your income count, within 60% of it (from 2026); if you take the standard deduction, up to $1,000 ($2,000 joint) is deductible too (from 2026). So gifts can lower what itemizing saves.
Allowed range$0 to $1,000,000 a year
Not includedGifts to a donor-advised fund or of property.
Other itemized deductions a year
Medical expenses and other deductions you’d itemize, already within their own limits. Not charity or taxes.
Where to find itLast year’s Schedule A, if you itemized.
How this tool treats itOn both returns, rising with inflation. They make it likelier that owning beats the standard deduction.
Allowed range$0 to $1,000,000 a year
State income tax rate
Your state’s income tax rate on your top dollars of income, which is the rate this extra income would be taxed at. Leave it at 0 to leave state tax out.
Where to find itYour state’s rate table for your filing status, at your income. It is usually higher than your average rate, which is last year’s state tax divided by your income.
How this tool treats itApplied to the gains when you sell: the taxable part of the home’s gain and the investments’ gains, on each side. Most states follow the federal home-sale exclusion, so the rate is applied only to the gain that is federally taxable. State income tax you pay each year goes in the field for state and local income tax.
Allowed range0% to 15%
Invest each month’s difference
Leave it on if you’d invest what you save each month on the cheaper path. Turn it off if you’d spend it.
How this tool treats itOn, both paths spend the same cash each month: whichever costs less invests the difference, and the owner invests each year’s tax saving. Off, neither does, but the renter still invests the down payment and closing costs. Research that found renting beat owning over long periods relied on the renter investing the difference every month.
Show in today’s dollars
Turn it on to see later years’ figures in today’s money.
How this tool treats itEach figure for the end of a year is divided by the inflation you entered, compounded to that year, and rounded to the cent. It changes no comparison: which path leaves more, the year buying pulls ahead and the break-even rent are the same either way.
Questions
Is it cheaper to rent or buy?
Why does staying longer favor buying?
Does the mortgage interest deduction make buying cheaper?
What is the break-even rent?
What if I wouldn’t invest the difference?
Do I pay tax when I sell my home?
What is a good price-to-rent ratio?
Version history
- October 31, 2026 (version 1.0.0): First version.