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Rent vs Buy Calculator — Which Builds More Wealth?
This rent vs buy calculator compares your net financial position under both paths — home equity and appreciation for buying, versus rent plus the growth of whatever you'd have invested instead. See your break-even year, not just a monthly payment comparison.
Compare renting and buying, side by side
Updates liveIf you buy
If you rent instead
| Year | Net worth: buying | Net worth: renting | Difference |
|---|
Illustrative estimate only. Assumes the money not spent on a down payment and closing costs is invested at the rate you enter, and that costs, rent and home value grow steadily at the rates you set. Real markets are far less smooth than this.
Who checks this calculator
Renting isn't "throwing money away"
The real financial math behind renting vs buying
A rent vs buy calculator that only compares a mortgage payment to rent is missing most of the picture. This one compares net worth instead.
What the national data actually shows
According to Zillow's 2026 rent vs buy analysis, the typical US buyer now breaks even against renting in about six years nationally — down from a peak of 8.4 years back in October 2023. That's a meaningful shift, and it's not uniform across the country.
In more affordable Midwest metros like Columbus, Memphis and Buffalo, buyers break even in as little as four years, since the gap between what you'd pay to rent and what you'd pay to own is relatively small.
In expensive coastal markets like San Francisco and San Jose, the math tells a very different story — renting can stay ahead of buying over a full 30-year horizon in some of these places, purely because home prices have run so far ahead of rents.
This is exactly why a rent vs buy calculator needs your actual local numbers, not a national average, to be useful. Your break-even point could reasonably be anywhere from three years to never, depending almost entirely on your local price-to-rent ratio.
How this calculator actually works
Most simple rent-vs-buy comparisons just look at "mortgage payment vs rent payment" and call it a day. That misses the two biggest financial forces at play: home equity and opportunity cost.
On the buying side, this calculator tracks your loan balance paying down, your home value growing at the appreciation rate you set, and what you'd actually walk away with after paying selling costs if you sold in any given year.
On the renting side, it tracks what would happen if the money you didn't spend — your down payment, your closing costs, and any month where renting is cheaper than owning — got invested instead, growing at the return rate you set. This mirrors how NerdWallet's own rent vs buy methodology handles the comparison.
The break-even year is simply the point where your net worth from buying overtakes your net worth from renting and investing. Before that year, renting has actually put you in a stronger financial position; after it, buying has.
| Factor | Buying | Renting |
|---|---|---|
| Upfront cash | Down payment + closing costs, tied up in the home | Same amount, invested and growing |
| Monthly cost | P&I + tax + insurance + maintenance + HOA | Rent, which typically grows more slowly than home prices in most years |
| Wealth building | Equity from paydown + home appreciation | Investment growth on the difference in monthly cost |
| Exit cost | Realtor commission, typically 5-6% of sale price | None |
Why this calculator defaults to 9% down, not 20%
The old rule of thumb that you need 20% down to buy a home hasn't matched reality for a while. According to the National Association of Realtors, the median down payment among first-time buyers is around 9%, which is why this calculator uses that as its starting point rather than the more traditional 20%.
A smaller down payment does mean paying PMI until you reach 20% equity, which is baked into a slightly higher effective monthly cost in this model. But it also means less cash tied up and available to invest if you'd chosen to rent instead — the trade-off cuts both ways, and adjusting the down payment field lets you see exactly how much it matters for your situation.
The one assumption that changes everything
Of every input in this calculator, the investment return rate has the single biggest effect on your result — often larger than home price, rent, or even your local tax rate. A modest bump from a 5% to a 7% assumed return can push your break-even point out by years, sometimes past a reasonable time horizon entirely.
This is genuinely debated among financial planners. A higher assumed return usually mirrors long-run stock market averages, which makes renting-and-investing look stronger on paper.
A lower, more conservative rate — closer to what a cautious investor might actually achieve after taxes and behavioral mistakes like panic-selling — tends to favor buying instead. There's no single correct number, which is exactly why this field is worth testing at a few different levels rather than trusting one default blindly.
What about the mortgage interest deduction?
This calculator deliberately doesn't model itemized tax deductions for mortgage interest. Since the standard deduction nearly doubled in 2018, the majority of US homeowners no longer benefit meaningfully from itemizing, so building that assumption in by default would overstate the advantage of buying for most people.
If you do itemize and are in a higher tax bracket, the true cost of owning shown here is somewhat conservative — the CFPB has more on how the mortgage interest deduction works, and the real number would be a bit lower for you specifically.
When the math isn't the whole story
Even a favorable break-even number doesn't automatically make buying the right call, and an unfavorable one doesn't automatically rule it out. Stability for kids in a school district, the freedom to renovate, or simply not wanting a landlord able to raise rent or decline to renew a lease all carry real value this calculator can't price.
The reverse is true too — flexibility to relocate for a job, avoiding maintenance responsibilities, or simply not wanting your net worth concentrated in one illiquid asset are legitimate reasons to keep renting even when the numbers modestly favor buying. Use this calculator to inform the financial side of the decision, not to make the whole decision for you.
How to use this calculator
Start with real numbers for your market: an actual home price you're considering (run it through our mortgage calculator for the exact payment), and the actual monthly rent for a comparable property nearby, not a national average. Local price-to-rent ratios vary so much that generic defaults can be seriously misleading for your specific city.
Set "years you'll stay" to your honest best guess, not an aspirational one — check our home affordability calculator first if you're unsure what price range makes sense. If there's real uncertainty about how long you'll stay, run the calculator twice — once at a conservative shorter horizon and once longer — to see how much that uncertainty actually matters to the verdict.
Closing costs cut both ways
This calculator bakes in a standard 3% closing cost assumption on the purchase side (see our closing cost calculator for a detailed breakdown), covering the appraisal, title work, origination fees and other charges typical of a home purchase.
That amount comes straight out of your available cash the same way the down payment does, which is why it's added to the "invested" side of the renting scenario too — it's money that would otherwise sit in your investment account rather than at the closing table.
On the way out, the selling-cost field defaults to 6%, roughly matching typical real estate commission structures, though this can run higher or lower depending on your market and how you sell. It's worth adjusting if you know your local norms are different — a couple of percentage points on a $400,000+ sale is a meaningful chunk of your eventual net worth from buying.
Why maintenance deserves a realistic number
The 1% default maintenance assumption is a commonly cited industry rule of thumb, but it's an average across a wide range of homes and conditions. A newer home with a recent roof and updated systems might run comfortably under that; an older home, or one you're buying below market because it needs work, can easily run well above it in the first several years.
Because this cost compounds every year of your ownership horizon, getting it roughly right matters more than it might seem. Renters, worth remembering, don't carry this cost at all — it's entirely absorbed by the landlord, which is one of the genuine financial advantages of renting that's easy to overlook when comparing raw monthly payments.
Why rent and home prices don't always move together
It's tempting to assume rent and home prices move in lockstep, but they often don't over any given stretch of years. Rent tends to track local wages and vacancy rates fairly closely, while home prices react more to mortgage rates, buyer demand and available inventory — forces that can push prices up or down independently of what's happening in the rental market.
This is part of why the appreciation rate and rent growth rate in this calculator are separate, adjustable fields rather than one combined assumption. In some periods and some cities, home prices have run well ahead of rent growth, favoring renters who invest the difference. In others, rent has climbed faster while home prices stayed flat, which favors buyers who locked in a fixed monthly cost early.
A fair critique of the opportunity-cost model
This calculator's approach — assuming a renter genuinely invests the difference every single month — is a common and reasonable modeling choice, but it's worth being honest that it assumes real financial discipline. In practice, plenty of renters don't consistently invest the gap between rent and what a mortgage payment would cost; that money often gets absorbed into other spending instead.
If that's a realistic concern for your own situation, the true financial comparison tilts more favorably toward buying than this calculator's output suggests, simply because forced equity paydown through a mortgage payment doesn't require the same ongoing discipline that voluntary investing does. It's worth being honest with yourself about which pattern actually describes you before trusting the renting-and-investing side of this comparison at face value.
Factors this calculator deliberately leaves out
Beyond the lifestyle considerations already covered, a few other real factors don't get modeled here at all. Renovation potential and the ability to customize a space to your taste, the psychological value of stability and not facing a lease renewal each year, and community ties that come with staying in one place all carry genuine value that doesn't show up in a spreadsheet.
On the renting side, the ability to relocate quickly for a job opportunity, avoiding the risk of a concentrated illiquid asset, and simply not being responsible for a leaking roof at 2am are real, legitimate advantages this calculator's dollar figures don't capture either. Use the financial comparison as one meaningful input among several, not the sole basis for a decision this personal.
How extreme can the gap between markets get?
The spread between fast break-even markets and slow ones isn't subtle. A buyer in an affordable Midwest metro with reasonable rents relative to home prices can genuinely break even in three or four years. A buyer in one of the most expensive coastal markets, where home prices have detached significantly from local rents, can see renting stay ahead of buying for a full 30-year horizon under otherwise reasonable assumptions.
This is exactly why a single national headline number, however accurate on average, is nearly useless for an individual decision — your specific city, and ideally your specific neighborhood's price-to-rent ratio, matters far more than any national average this or any other source publishes.
What happens if your plans change mid-decision
Life circumstances shift, and a homeowner who planned to stay ten years sometimes needs to move in three, just as a renter who planned to stay flexible sometimes ends up settling somewhere for decades. This calculator's "years you'll stay" input is a planning assumption, not a binding commitment, and it's worth revisiting the numbers whenever your actual circumstances change meaningfully.
If you're already a homeowner facing an earlier-than-planned move, running this same calculator backward — using your actual years owned instead of a future plan — gives an honest read on how the decision actually played out financially, which can be a useful gut check even after the fact.
Costs on the renting side this calculator simplifies
This calculator's renting side is deliberately simple — just monthly rent growing at a set rate. Real renting comes with a few smaller costs not explicitly modeled: renters insurance, typically a modest monthly amount, security deposits that tie up some cash temporarily, and occasional moving costs if you relocate between rentals more than once during your comparison horizon.
These costs are usually small relative to the headline numbers this calculator produces, but adding a rough renters insurance estimate to your monthly rent figure, and factoring in a moving cost or two if relevant to your situation, sharpens the comparison further for anyone wanting maximum precision.
There's no universally correct answer
After running every variable through this calculator, it's worth remembering that even a precisely calculated break-even year is still built on assumptions about the future — appreciation, rent growth and investment returns that nobody can know with certainty in advance.
The value here isn't a guaranteed right answer, it's a clearer, more honest starting point than guessing, and a tool to revisit as your actual circumstances and the market both evolve. Whichever direction the numbers lean for you today, checking back in a year or two, especially after any major life or market change, keeps the decision grounded in current reality rather than an assumption made once and never revisited.
The bottom line
Buying and renting each have real financial merit depending on your specific numbers, timeline and local market — neither is universally correct. Use this calculator honestly, with your actual figures rather than optimistic guesses, and treat the output as one important input alongside the lifestyle factors only you can weigh, since no spreadsheet can fully capture what a place actually means to the people living in it.
Common questions