Rent vs. Buy Calculator
An honest model that includes opportunity cost, closing costs, and the variables most calculators ignore.
How to read this
The break-even point is the year at which a buyer's net worth — home equity after selling costs — first overtakes a renter's investment account. Before that year, renting plus investing the difference puts you ahead. After it, ownership pulls ahead. Most rent-vs-buy advice ignores this crossover entirely and just compares monthly costs.
Why opportunity cost is included. A down payment is real money that could otherwise be invested. Comparing a mortgage payment to rent without crediting the renter for investing the down payment overstates the case for buying. We compound the down payment — and any monthly savings when renting is cheaper — at the investment return rate so the comparison is apples to apples.
The 1% annual maintenance assumption covers routine upkeep, repairs, and replacement reserves — roof, HVAC, water heater, appliances, paint, plumbing. Industry rules of thumb range from 1% to 4% of home value annually. We use 1% as a conservative floor; older homes and higher-cost regions can run materially higher.
The 6% selling cost assumption reflects realtor commissions (historically 5–6%), title and escrow fees, transfer taxes, and minor closing costs. Recent legal changes have started to decouple buyer's and seller's commissions, so this number may drift downward over time, but 6% remains a defensible baseline.
Timeline is everything. Transaction costs — closing on the way in, selling costs on the way out — make short-term ownership expensive. The longer you stay, the more the recurring costs of renting compound and the more equity and appreciation accrue to the buyer. A move within five years almost always favors renting; a stay of fifteen-plus years almost always favors buying.
About the default values
Home purchase price defaults to $360,000 — close to the US median single-family home sale price in 2026 per National Association of Realtors and Census data. Adjust to your local market; coastal metros run materially higher.
Down payment defaults to 20%. This is the threshold at which most conventional lenders waive private mortgage insurance (PMI), and it's the figure most personal finance guidance treats as the standard target. FHA and conventional loans allow as little as 3% to 5% down with PMI.
Mortgage type defaults to 30-year fixed — the dominant US mortgage product, used in roughly nine out of ten purchase loans. The 15-year fixed carries a lower rate and builds equity faster but requires a meaningfully higher monthly payment.
Mortgage interest rate defaults to 6.5% for 30-year and 5.9% for 15-year, matching approximate Freddie Mac PMMS averages in 2026. Rates move daily; check current quotes before treating the output as precise.
Current monthly rent defaults to $1,700 — close to the 2026 US average asking rent across all unit types per Zillow and Apartment List data. Substitute your actual rent for the most accurate comparison.
Annual rent increase defaults to 3.5% — the long-run average year-over-year US rent growth in the 21st century. Recent pandemic-era spikes pushed this well above 7% in some markets; the long-run mean remains a defensible default. The 3.5% nominal default implies a real after-inflation rent increase of approximately 0.5% annually — using the same 3% long-run inflation assumption. In real terms rent increases barely outpace inflation over the long run, though individual markets vary significantly.
Annual home appreciation defaults to 4.0%. The Case-Shiller National Home Price Index has averaged roughly 4.2% nominal appreciation since 1967. We round down slightly as a conservative estimate — appreciation varies enormously by metro and decade. The 4.0% nominal default implies a real after-inflation appreciation rate of approximately 1% — using the same 3% long-run inflation assumption. This is an important distinction: real estate is often cited as a strong inflation hedge, but its real return after inflation is modest compared to equities. The nominal figure looks more impressive than the inflation-adjusted reality.
Annual property tax rate defaults to the National Average of 1.10%. Effective rates vary from 0.27% (Hawaii) to 2.23% (New Jersey). Select your state for a closer estimate, then override if your local rate differs.
Expected investment return defaults to 10.0% — the historical S&P 500 nominal average annual return before inflation. This tool operates entirely in nominal terms because too many input rates (mortgage, appreciation, rent increase, property tax) would each require their own inflation adjustment to model consistently. The 10% nominal default implies a real after-inflation return of approximately 7% — using a 3% long-run inflation assumption, which is the historical average and the figure used consistently across all Charted Course tools.
Before vs. After inflation toggle. The toggle above the chart shifts three inputs together — expected investment return, annual home appreciation, and annual rent increase — so the comparison stays apples to apples in either nominal or real terms. In Before inflation mode the defaults are 10%, 4.0%, and 3.5%. In After inflation mode the defaults are 7%, 1.0%, and 0.5% — each reduced by the same 3% long-run inflation assumption. If you manually override any of the three rates the tool remembers your custom value for that mode, so switching back and forth never silently overwrites your inputs.
Why 3% inflation. The US Consumer Price Index has averaged roughly 3% annual inflation over the long run — close enough to the historical mean across many decades to serve as a defensible single assumption. Every Charted Course tool uses the same 3% figure so the relationship between nominal and real returns is consistent across the Compounding Visualizer, Roth vs. Traditional Decider, and Rent vs. Buy Calculator. The difference between tools is only which side of the inflation adjustment is shown to you by default.
Years to analyze defaults to 10. Five years is typically too short for ownership to win after transaction costs; fifteen-plus years almost always favors buying. Ten is a reasonable middle estimate of how long the average US homeowner stays put.