Should you rent or buy? This calculator answers from a purely financial standpoint — interest, taxes, fees, appreciation, the investment return on cash you do not spend, and the mortgage tax deduction, all included — and shows both the average monthly cost and the net worth of each path for every year you might stay.
Filing status sets the 2025 standard deduction used in the tax calculation.
This calculator judges the question the way an accountant would: identical households, identical income, one buys and one rents an equivalent home, and every dollar of difference is accounted for — including the ones people forget. The buyer forgets maintenance, selling costs, and the return their down payment could have earned. The renter forgets that rent rises every year while a fixed mortgage payment does not, and that a paid-off home eventually costs only taxes, insurance, and upkeep. Both forget taxes: the buyer's mortgage interest and property tax are deductible, but only beyond the standard deduction — which is exactly how the model above treats them, SALT cap and all.
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Two measures, side by side in the table. Average monthly cost spreads each path's total economic cost — every payment, tax, fee, and premium, minus what you would walk away with if you sold (buyer) or minus nothing but the returned deposit (renter) — over the months you stay. It answers "which is cheaper to live in?" Net worth answers the sterner question: "if I settle up in year N, who is richer?" The buyer holds home equity (value minus selling costs minus remaining balance); the renter holds the invested upfront cash plus every monthly saving, compounded at your investment return. In the early years the two measures routinely disagree — buying can be cheaper monthly while the buyer is still behind on net worth, because the down payment is committed, equity builds slowly (early payments are mostly interest), and the 7% selling cost is charged the moment you leave. Time is the buyer's ally on both measures, just on different schedules.
Ownership's monthly bill is PITI plus upkeep. Principal repays the loan and is the only component that builds equity. Interest is the price of borrowing — deductible, within limits, and front-loaded: in year one of the default loan, roughly $29,000 of the $32,900 paid is interest. Taxes — property tax, typically 1–3% of value per year, levied by your city, county, and school district, and usually rising. Insurance — homeowners coverage your lender requires, plus PMI if you put down less than 20%. Beyond PITI sit the costs renters never see: maintenance (budget the 1–1.5% of value per year used here), HOA dues, and the transaction costs at both ends — a few percent to buy, around 7% to sell once commissions and fees are in. Round-trip transaction costs near 9–10% of the home's value are the single biggest reason short stays favor renting.
Staying length dominates everything — it amortizes those round-trip costs. Then: appreciation (U.S. homes have averaged roughly 3–5% a year nationally, but Shiller's long-run data puts real, inflation-adjusted appreciation near zero — a home is shelter first and an investment second, and local markets diverge wildly); the mortgage rate, which decides how much of each payment is interest; rent growth, which quietly makes renting worse every year; and your investment return, the opportunity cost of equity — money locked in walls cannot compound in markets. A senior holding Treasuries should model 3–4%; a young index investor, more. Honest inputs, honestly varied, beat a single precise-looking answer: run the calculator at pessimistic and optimistic settings and see whether the verdict flips.
Renting buys flexibility: leases run months to a few years, the landlord owns every breakdown, and your capital stays liquid and invested. Before signing: negotiate — terms are often softer than the listing; get every promise in writing; photograph the unit's condition at move-in so the deposit conversation at move-out has evidence; and know that federal law bars refusal based on race, sex, religion, disability, national origin, or familial status, with many states adding age, marital status, and sexual orientation. For the rent you can afford in the first place, use our rent calculator; for whether the purchase itself fits your income, the house affordability calculator — and price the mortgage itself on the mortgage calculator.
On average monthly cost, about 5.5 years. On net worth, much later — early equity is thin and selling costs are heavy. Plan a stay well past both numbers before buying.
Because settling up early charges the full ~7% selling cost and returns a balance barely reduced — most early payments were interest. Cheap to live in ≠ ahead if you leave.
Yes — interest and property tax deductions valued only above your standard deduction, property tax under the $10,000 SALT cap, interest on up to $750,000 of debt, at your federal + state marginal rates.
What you'd truly earn on the unspent down payment: ~3–4% for cash-like holdings, 6–8% for a long-horizon index portfolio. Higher returns favor renting.
Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial or tax advice. It assumes constant appreciation, rent growth, and investment returns, and a fixed mortgage rate; real outcomes will differ. Standard deductions shown are the 2025 federal amounts by filing status.