Is renting really throwing money away?

No, and neither is buying automatically building wealth. Rent buys housing without maintenance, transaction costs or price risk; a mortgage buys equity but also interest, upkeep and roughly 8% in round-trip transaction costs. Which wins depends mostly on the price-to-rent ratio in your market and how long you stay.

What is a good price-to-rent ratio?

Below about 13, buying tends to win fairly quickly. Between 13 and 18 it is genuinely close and the holding period decides. Above about 18, renting and investing tends to stay ahead unless appreciation is unusually strong. Across US counties the median is around 18.

Why does the calculator often favour renting?

Because it assumes the renter invests the difference and earns the return you selected. At a 10% return against 4% home appreciation, that is a high bar for buying to clear. Lower the return, raise appreciation, or find a lower price-to-rent ratio and the answer flips. The point is to show what would have to be true, not to recommend one over the other.

Does it include tax benefits of owning?

It includes the primary-residence capital gains exclusion but not the mortgage interest deduction, because only around one filer in ten itemizes since the 2017 standard-deduction increase. If you do itemize, buying does somewhat better than shown here.

Rent vs Buy Calculator

Renting is not throwing money away, and buying does not automatically build wealth. Start from your local price-to-rent ratio and see which position leaves you further ahead — and in which year.

Where are you comparing?

Optional. Fills in the local median price and rent so you have a starting point.

Home price

Monthly rent for a comparable place

Price-to-rent ratio15.2×

The price is 15.2 years of rent — borderline. Below about 13 buying usually wins; above about 18 renting usually does. This is the one figure here you can check yourself.

Down payment

Annual interest rate

Loan term

If you rented, what would the money earn?

The second-biggest lever after the ratio above. Nominal figures, matching the home appreciation below.

Invested in

Show figures in

Nominal: future dollars, as they will actually be. Bigger numbers, but a dollar in 2056 buys less.

Buying pulls ahead in

Never

Not within 30 years on these assumptions. Change the ratio or the return to see what would flip it.

Buying, final

$1,164,861.97

Renting, final

$2,332,146.99

Interest paid

$408,140.64

Rent paid

$1,255,991.76

Shown in future dollars, not adjusted for inflation.

Buying does not pull ahead within 30 years
On these assumptions renting stays ahead for the whole period. That is a real result, not an error — it usually means the investment return is high relative to home appreciation, or rent is low relative to the price. Try the sensitivity view before treating it as settled.

Net position, year by year

Show data table

Net position by year, buying versus renting
Year	Buying	Renting
1	$74,616.76	$104,435.38
2	$94,074.64	$122,070.72
3	$114,413.78	$141,030.28
4	$135,676.30	$161,451.15
5	$157,906.52	$183,485.02
6	$181,150.98	$207,299.67
7	$205,458.60	$233,080.28
8	$230,880.86	$261,031.57
9	$257,471.89	$291,379.85
10	$285,288.61	$324,375.06
11	$314,390.89	$360,293.68
12	$344,841.74	$399,440.92
13	$374,303.03	$442,154.65
14	$403,657.18	$488,807.63
15	$434,409.59	$539,812.40
16	$466,631.14	$595,624.27
17	$500,396.68	$656,746.90
18	$535,785.00	$723,736.77
19	$572,879.25	$797,208.48
20	$611,881.57	$877,955.91
21	$653,313.09	$967,158.67
22	$697,326.89	$1,065,702.12
23	$744,087.55	$1,174,564.35
24	$793,770.90	$1,294,825.89
25	$846,566.01	$1,427,680.39
26	$902,675.44	$1,574,446.47
27	$962,316.74	$1,736,580.90
28	$1,025,724.31	$1,915,692.91
29	$1,093,149.17	$2,113,560.30
30	$1,164,861.97	$2,332,146.99

Assumptions used

Assumption set 2026-04-30

Investment return: 10%user input; Nominal, so it must be read against the nominal home appreciation below rather than compared to a real return. This is the single input that moves the answer most.
Home appreciation: 4%user input; Nominal, matching the investment return.
Rent growth: 3%user input
Mortgage interest deduction: Not includeddefault; Since the 2017 standard-deduction increase only about one filer in ten itemizes, so for most people this is worth nothing. Excluding it makes buying look slightly worse than it may be for you — if you itemize, expect buying to do somewhat better than shown.

Rent vs Buy Comparison

Generated … · Assumption set 2026-04-30

How this calculator works

The useful question is not whether rent is cheaper than a mortgage payment — that comparison ignores both that mortgage payments build equity and that a down payment could have been invested instead. This calculator compares net worth. The buyer accumulates equity and appreciation while paying interest, property tax, insurance, maintenance and transaction costs. The renter invests the down payment and any month where owning would have cost more, and pays rent that rises over time. Whichever side has the smaller housing bill in a given month invests the difference, so the cash-flow gap is carried by the portfolios rather than counted twice.

Reviewed for calculation accuracy and clarity by the Mortgage Well Calculation Review Team · September 2, 2026

When to use this

You can afford to buy but are not sure it beats renting and investing.
You are weighing a short stay against a long one — the holding period usually decides it.
You want to know what would have to be true for buying to win where you live.

Methodology

The price-to-rent ratio is the home price divided by a year of rent. It is the only input here you can verify rather than forecast, and it dominates the result: below roughly 13 buying tends to win, above roughly 18 renting tends to. Everything is computed in nominal terms and deflated for display when you choose today's dollars — that matters because a fixed mortgage payment shrinks in real terms every year while rent does not, which is a genuine advantage of buying that a real-terms model can accidentally omit.

price-to-rent = home price / (monthly rent x 12)

BUY   equity (value - balance) - selling costs - gain tax
      + the buyer's portfolio, for months when renting cost more

RENT  the renter's portfolio, after tax on gains

break-even = first year buying leads and keeps leading

Assumptions

Investment return, home appreciation and rent growth are forecasts, not facts. They move the answer more than anything except the price-to-rent ratio.
Nominal and real figures switch as a set. Comparing a nominal return against a real appreciation rate makes renting win regardless of the other inputs.
The renter actually invests the difference every month. Many people do not, and the comparison assumes they do.
Capital gains tax is applied to investment growth; the primary-residence exclusion ($250,000 single, $500,000 married) is applied to home gains.
The mortgage interest deduction is NOT included. Since 2017 only about one filer in ten itemizes, so for most people it is worth nothing — but if you itemize, buying does somewhat better than shown.
Retirement accounts cannot absorb a down payment: IRA and 401(k) limits are far below a typical deposit, so most of it would sit in a taxable account.
Rent control caps annual increases rather than freezing rent, and exemptions for newer buildings, single-family homes and condos are wide.

Example

A $400,000 home against $2,200 a month in rent is a price-to-rent ratio of 15.2 — borderline. At a 10% nominal return and 4% appreciation, renting and investing stays ahead for the full thirty years. Drop the ratio to 12 (the same home against $2,778 rent) and buying pulls ahead by year 4. Keep the ratio and drop the return to 7% instead, and buying wins by around year 6. The ratio and the return decide it; almost nothing else comes close.

Frequently asked

Is renting really throwing money away?: No, and neither is buying automatically building wealth. Rent buys housing without maintenance, transaction costs or price risk; a mortgage buys equity but also interest, upkeep and roughly 8% in round-trip transaction costs. Which wins depends mostly on the price-to-rent ratio in your market and how long you stay.
What is a good price-to-rent ratio?: Below about 13, buying tends to win fairly quickly. Between 13 and 18 it is genuinely close and the holding period decides. Above about 18, renting and investing tends to stay ahead unless appreciation is unusually strong. Across US counties the median is around 18.
Why does the calculator often favour renting?: Because it assumes the renter invests the difference and earns the return you selected. At a 10% return against 4% home appreciation, that is a high bar for buying to clear. Lower the return, raise appreciation, or find a lower price-to-rent ratio and the answer flips. The point is to show what would have to be true, not to recommend one over the other.
Does it include tax benefits of owning?: It includes the primary-residence capital gains exclusion but not the mortgage interest deduction, because only around one filer in ten itemizes since the 2017 standard-deduction increase. If you do itemize, buying does somewhat better than shown here.

Sources and references

Helpful consumer references used to explain assumptions on this page. These are educational pointers, not regulatory endorsement.

CFPB — Loan Estimate explainer — consumer guidance on what a real lender Loan Estimate contains; this calculator is not one
Internal — fully-amortizing fixed-rate formula — standard P&I formula, taxes/insurance divided to monthly amounts

Estimates only. This calculator is not a loan offer, loan approval, official Loan Estimate, Closing Disclosure, tax advice, legal advice, or financial advice. Actual payments, rates, taxes, insurance, mortgage insurance, closing costs, and loan terms may vary. Contact a qualified lender, tax professional, or financial advisor for guidance.