Rent vs Buy Calculator

The comparison has to be fair to be useful

Most rent-versus-buy calculators compare a mortgage payment with a rent cheque and stop there. That is not a comparison, it is a trick — it ignores that the buyer sank tens of thousands of dollars into a down payment and closing costs that the renter still has, and it ignores that part of a mortgage payment builds equity while property tax, insurance, maintenance and interest simply disappear.

This calculator gives both paths the same money. Whichever option costs less in a given month, the difference is invested at the return you set. If buying costs $400 more a month, the renter invests $400 that month; if renting costs more, the buyer invests the difference. At the end it compares net worth — the home's value minus what selling would cost and what you still owe, against the renter's investment account after capital gains tax. That is the only version of the question that has a real answer.

Selling costs are the number people forget

You do not get to keep your home's sale price. Agent commissions averaged about 5.7% in 2026 — they went up after the NAR settlement, not down as widely predicted — and title, escrow and transfer costs add roughly another one to two points. That means a home has to appreciate around 8% before selling gets you back to level, before counting the 2% to 5% you paid to buy it in the first place.

This is why the "years you'll stay" field moves the answer more than almost anything else. Buy and sell inside three years and the transaction costs alone will usually beat any appreciation. Stay ten years and the same purchase often wins comfortably. The break-even is rarely the five years people quote — check yours above.

The mortgage interest deduction is mostly a myth now

This is the single biggest thing calculators get wrong, and it is worth being blunt about. Mortgage interest is an itemised deduction, and it is worth nothing at all unless your total itemised deductions beat the standard deduction — $16,100 single or $32,200 married filing jointly in 2026. Property tax helps you get there, but only up to the SALT cap, which OBBBA raised to $40,400 for 2026 with a phase-out starting at $505,000 of income and a return to $10,000 in 2030.

Run the numbers on a typical purchase and the result is often a flat zero. A $357,000 mortgage at 6.5% throws off about $23,000 of interest in year one; add $4,600 of property tax and a single filer clears the standard deduction by around $11,500, worth roughly $2,500 at 22%. A married couple with the same house gets nothing — $27,600 of deductions against a $32,200 standard deduction. And the benefit shrinks every year as the interest portion falls. The calculator runs this test year by year rather than assuming you itemise, which is why its tax figure is usually far below what an agent will tell you.

What this means if you are self-employed

Two things change for freelancers, and they pull in opposite directions. In your favour: if you work from home you can take the home office deduction either way, and as a renter the business-use share of your rent is deductible under the actual-expense method — a benefit owners get only through depreciation, which is then recaptured when you sell. Against you: qualifying for the mortgage at all is harder, since lenders count Schedule C net profit rather than revenue, which our affordability calculator works through in detail.

There is also a liquidity argument that rarely appears in these comparisons but matters enormously with irregular income. A down payment converts flexible cash into an asset you cannot sell in a bad quarter, and a mortgage is a fixed obligation in a month with no invoices. If your income swings, the right emergency fund before buying is larger than the three months usually recommended — and that money should come out of the down payment, not out of thin air.

What the calculator assumes, and where it is soft

Appreciation and investment returns are entered as smooth annual rates, which real markets never are — the order of good and bad years matters, and no calculator can tell you that. Rent is assumed to track your chosen growth rate rather than jumping at each lease renewal. PMI is not modelled, so putting less than 20% down makes buying look slightly better than it is. The mortgage calculator handles PMI properly once you have a price. And the $250,000 single / $500,000 married exclusion on gains from selling a main home is not applied, because it rarely binds at these horizons.

Frequently asked questions