How does rent affect the break-even year?
| Monthly rent (same home) | Price-to-rent ratio | Buying breaks even |
|---|---|---|
| $1,800 | 19.7 | Not within 30 years |
| $2,300 | 15.4 | Year 8 |
| $2,800 | 12.6 | Year 4 |
| $3,300 | 10.7 | Year 3 |
$425,000 home, 20% down, 6.5% 30-year fixed, 3.5% price and rent growth, 6% investment return, 6% selling costs.
What does this calculator compare?
Two households with the same budget. The buyer pays the down payment and closing costs, then mortgage, property tax, insurance, maintenance and any PMI or HOA. The renter pays rent and renters insurance and invests everything the buyer spent up front, plus the monthly difference whenever renting is cheaper. At each year we compare the buyer’s home equity (after selling costs) with the renter’s portfolio.
Which assumptions matter most?
- How long you stay. Transaction costs are paid once, so every extra year spreads them thinner.
- Price growth vs investment return. If homes appreciate faster than the renter’s investments grow, buying wins sooner.
- Mortgage rate. Higher rates raise the buyer’s monthly cost and push the break-even out. Check today’s average in Freddie Mac’s weekly survey.
- Maintenance. Budget about 1% of the home’s value a year; older homes cost more.
Decided to buy? See how much house you can afford and your full monthly mortgage payment.
Frequently asked questions
How long do you need to stay for buying to beat renting?
Often five to ten years, because buying and selling a home costs roughly 8%–10% of its price in closing costs, agent fees and transfer taxes. The break-even year depends most on the price-to-rent ratio, mortgage rate and how fast prices and rents grow.
What is the price-to-rent ratio?
Home price divided by a year’s rent for a similar home. A $425,000 home that rents for $2,300 a month has a ratio of 15.4. As a rough guide, under 15 tends to favor buying and above 20 tends to favor renting.
Is renting throwing money away?
No. Owning has its own unrecoverable costs — mortgage interest, property tax, insurance, maintenance and transaction fees. Rent can be cheaper than those costs, and a renter who invests the difference can build similar wealth.
Does the mortgage interest deduction change the answer?
Usually not much. With a $32,200 joint standard deduction in 2026, most homeowners don’t itemize, so the mortgage interest deduction gives little or no extra benefit. The calculator leaves it out.
Sources
Estimates for planning, not financial, tax or legal advice. CalciTools calculators use published government figures and the assumptions shown on each page. Your actual numbers depend on details we don’t model. Check important decisions with a qualified professional.