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Rent vs Buy Calculator 2026 — Break-Even Year & True Total Cost
Use the rent vs buy calculator to compare renting and buying on a true total-cost basis over your expected time in the home — mortgage, taxes, insurance, maintenance, closing costs, and the opportunity cost of your down payment — so you know the exact year buying becomes cheaper than renting in your market.
A rent-versus-buy calculator compares the total cost of renting against owning over a chosen time horizon, including payment, taxes, insurance, maintenance, transaction costs, and expected appreciation or rent growth. The break-even horizon usually matters more than the monthly comparison. Results depend heavily on assumptions and are illustrative only.
- ✓Buying almost always wins if you stay 7+ years; renting almost always wins if you move within 2–3.
- ✓The break-even year depends most on price-to-rent ratio, mortgage rate, and expected home-price appreciation.
- ✓Total cost of ownership = PITI + maintenance (~1%/yr) + HOA + closing on both ends − appreciation − principal paid down.
- ✓Include opportunity cost: the down payment invested at ~5–7% real return is a real cost of buying.
- ✓Educational estimate only — not a rate quote, lock, offer, or commitment to lend.
Written by
Simply Approved Mortgages Team
Licensed Loan Officers · NMLS# 2620881
Get your personalized scenario summary
Complete the short request and a Simply Approved Mortgages Loan Officer sends back a written summary built from your own numbers: estimated payment breakdown, estimated cash to close, the loan structures that fit your file, and what documentation the file will need.
- Estimated monthly payment with taxes and insurance
- Estimated cash to close for your scenario
- Loan options your profile may fit
- Document checklist for your file
Takes about 3 minutes · Summary shown on screen and emailed to you
Illustration only, generated from the information you enter. Not a rate quote, lock, loan estimate, pre-qualification, offer, approval, or commitment to lend. Figures are subject to credit, income, asset and property review and full lender underwriting; binding numbers appear on your Loan Estimate.
Scenario summary
- Purchase price entered
- $412,000
- Down payment entered
- $20,600
- Estimated loan amount
- $391,400
- Estimated cash to close
- $14,300
- Programs reviewed
- 4
Sample layout with example figures — your own numbers replace these. Simply Approved Mortgages LLC · NMLS #2620881 · Equal Housing Opportunity.
How the Rent vs Buy Break-Even Works
The calculator projects two parallel scenarios year-by-year: continuing to rent (with rent inflation) versus buying (with PITI, maintenance, HOA, appreciation, principal paydown, and eventual sale costs). The break-even year is when cumulative net cost of buying drops below cumulative net cost of renting. Below that year you should rent; above it you should buy.
The 7 Inputs That Move Break-Even the Most
- Price-to-rent ratio — annual rent ÷ home price. Under 15 favors buying; over 21 usually favors renting. National average is around 18–20 per the 2026 JCHS State of the Nation's Housing report.
- Mortgage rate — every 1% rate move changes the break-even by roughly 1–2 years.
- Expected home-price appreciation — FHFA HPI 30-year national average is ~4.3%/yr; use 2–3% for a conservative estimate.
- Rent inflation — BLS CPI rent index has averaged ~3.5%/yr since 2000; hot metros higher.
- Down payment opportunity cost — what that cash would earn invested. Use your real long-run stock return (5–7%).
- Time horizon — how many years until you'd likely move.
- Closing costs — buy-side ~2–5% of price; sell-side ~6–8% including agent commissions.
What the Calculator Actually Considers
- Purchase price, down payment, closing costs (per Bankrate & LodeStar state averages).
- Monthly PITI including property tax and homeowners insurance.
- PMI if putting less than 20% down (conventional) or FHA MIP.
- HOA and Mello-Roos / CDD dues.
- Home appreciation on the buy side; rent inflation on the rent side.
- Ongoing maintenance at ~1% of home value per year (Freddie Mac guidance).
- Opportunity cost of the down payment invested elsewhere.
- Selling costs on the exit — agent commission, transfer tax, title, prorations.
- Federal tax deduction (defaults off — since the 2017 TCJA, standard deduction is high enough that most households don't itemize).
Want these numbers built around your file?
A short request is all it takes to get a written scenario summary back from a Simply Approved Mortgages Loan Officer. Binding figures appear on your Loan Estimate.
When Renting Is Mathematically Better
- You'll move within 3 years for work, family, or life changes.
- Local price-to-rent ratio is above 25 (many CA and NYC-area markets).
- You don't have a full 3–6 month emergency fund plus down payment.
- You can invest the down-payment cash at a higher expected real return than your local home appreciation.
- You'd need to stretch DTI over 43% to qualify.
When Buying Wins Even With a Short Timeline
- You're using a low-down-payment program (FHA 3.5%, VA 0%, USDA 0%) that keeps opportunity cost minimal.
- Local rent inflation is running above 5% while price appreciation is at trend.
- You'd otherwise rent above the price-to-rent ratio in your zip.
- You have a seller credit, rate buydown, or assumable VA/FHA loan lowering the effective rate.
Common Mistakes People Make
- Comparing rent to only principal + interest instead of full PITI + maintenance + HOA.
- Ignoring buy-side and sell-side closing costs — combined can equal a full year of rent.
- Using inflated home-price appreciation assumptions (10%+) based on recent hot years instead of the FHFA long-run.
- Forgetting opportunity cost on the down payment.
- Assuming you'll itemize — most households take the standard deduction post-TCJA.
The New York Times published the reference rent-vs-buy framework in 2007 and updated it in 2014, 2019, and 2026. Our tool follows the same methodology with 2026 tax and mortgage rules. Educational estimate only — get a personalized Loan Estimate from a Simply Approved Mortgages Loan Officer before committing.
Sources: FHFA House Price Index, BLS Consumer Price Index (Rent of Primary Residence), JCHS State of the Nation's Housing 2026, Bankrate Average Closing Costs by State 2026, Freddie Mac maintenance guidance, IRS Publication 936.
Compare loan officer compensation on your mortgage quote
Loan officer compensation is part of the cost of a mortgage. On eligible residential loans, Simply Approved Mortgages generally uses 1.5% lender-paid compensation. Enter the compensation shown on another lender's Loan Estimate to see the difference in dollars.
Compensation difference on this illustration: $3,750.
How lower compensation can help you
When less compensation is built into pricing, there can be room for a lower interest rate, which may lower your monthly payment.
Depending on the rate you choose, pricing can sometimes include a lender credit toward third-party closing costs, so you may bring less cash to closing.
A lower rate means a lower monthly payment, which can lower your debt-to-income ratio and may help you qualify for more home on the same income.
As a mortgage broker we compare pricing from wholesale lenders instead of offering a single bank’s retail pricing.
Tip: On page 2 of your Loan Estimate, look at Section A, "Origination Charges." If the lender pays the loan officer, that compensation usually does not appear there as its own line; it is built into the interest rate. That is why comparing the rate and any lender credits side by side matters.
Already have a Loan Estimate from another bank or broker? Share it with a Simply Approved Mortgages Loan Officer, who will compare the rate, fees and credits side by side with options we can arrange. No cost to request a review.
Illustration only — not a quote, lock, offer, or commitment to lend; binding figures appear on your Loan Estimate. Lender-paid compensation is paid by the lender, not directly by you, and is part of the loan's pricing, so the loan is not free of costs. A lower compensation figure does not by itself guarantee a lower rate or lower closing costs; individual results vary by credit, loan type, property and market conditions. Residential lending in FL and CO only. Simply Approved Mortgages LLC · NMLS #2620881 · Equal Housing Opportunity.
Purchase market update
What buyers should know this month
30-Yr Fixed · national avg
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15-Yr Fixed · national avg
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2026 buying power
Conforming baseline: $832,750
FHA floor / ceiling: $541,287 – $1,249,125
Cost and payment tools
Run your payment, affordability, closing cost and refinance numbers
Monthly payment, affordability, closing costs, refinance break-even and early payoff, all on one screen. This page is not written for one state, so property tax, insurance and transfer or recording charges start at neutral placeholder assumptions rather than published averages — Transfer, documentary-stamp and recording charges are set by your state and county — enter your own figure, or open the state page for a sourced seed. Insurance and tax assumptions vary widely by state, county and property, so replace these starting values with quotes for your address. Every figure is an illustrative estimate, not a quote, lock, offer, approval, or commitment to lend.
Your inputs
Estimated result
- Down payment
- $20,000
- Loan amount
- $380,000
- Principal & interest
- $2,402
- Property tax
- $333/mo
- Homeowners insurance
- $167/mo
- Estimated total monthly
- $2,902/mo
Reference sources: Tax Foundation — property taxes paid as a percentage of owner-occupied housing value, NAIC — Homeowners Insurance Report, CFPB — Understanding your Loan Estimate.
Assumptions, methodology, and limitations
Principal and interest use the standard amortization formula on the loan amount you enter. This page does not target a single state, so the property tax and insurance fields start at neutral placeholder assumptions rather than published averages — replace them with figures for your own address, or open the matching state page for sourced seeds. Closing costs apply your state's transfer / documentary-stamp practice (0.00% of price used as the buyer-side seed) plus typical title, recording, appraisal, credit and prepaid escrow lines. Refinance break-even divides your entered costs by the monthly payment difference. Early payoff runs a month-by-month amortization with your extra principal.
These tools do not include mortgage insurance, funding or guarantee fees, HOA special assessments, flood or windstorm premiums, seller credits, lender credits, discount points, or county and municipal charges specific to your parcel. Statewide averages will not match any individual property. Figures are estimates only.
Illustrative only. Binding figures appear on your Loan Estimate, and terms vary by borrower, property, lender, program, and state.
Turn these estimates into real numbers
Send your scenario to a Simply Approved Mortgages Loan Officer and get a written summary back, or compare where rates sit today. Educational only — not a quote, lock, offer, approval, or commitment to lend.
Frequently Asked Questions
Answers written by licensed loan officers.
Ask SAM anything about mortgages
SAM is the Simply Approved Mortgages AI assistant. It answers general questions using the reviewed guides published on this site and links you to the primary government source. It is educational only — it does not quote a rate, payment, APR, approval or commitment to lend. A Simply Approved Mortgages Loan Officer reviews every scenario before any terms are confirmed.
Hi, I'm SAM — an AI assistant for Simply Approved Mortgages. I can explain loan programs, closing costs, DTI, down payments and which calculator or guide to use. I'm not a licensed loan officer, and nothing here is a quote, approval or commitment to lend.
Ask Sam AI provides general educational information only. It is an automated assistant, may be incomplete or out of date, and does not provide legal, tax or financial advice. Nothing it produces is a rate quote, APR, pre-approval, offer or commitment to lend. Never share a Social Security number, ITIN, date of birth, account number or password in chat. Simply Approved Mortgages LLC (NMLS #2620881) arranges residential mortgage loans in Florida and Colorado. Eligibility, terms, conditions and availability vary by borrower, property, lender, loan program and state, and all loans are subject to lender underwriting and approval. Equal Housing Opportunity.
Trusted government resources
These independent government resources can help you research mortgage programs, rates, and your rights before you apply.
CFPB
CFPB — Owning a Home Toolkit
IRS
IRS — Publication 936 (Home Mortgage Interest Deduction)
FHFA
FHFA — House Price Index (long-run appreciation)
BLS
BLS — CPI Rent of Primary Residence
Simply Approved Mortgages is not affiliated with HUD, the CFPB, the FTC, the VA, or any other government agency. Links are provided for your independent verification.
How this page connects
Where this fits in the mortgage calculators library
This page sits inside our Mortgage calculators coverage.
What most readers open next
- What PITI includesBecause the escrow half of the payment surprises most buyers.
- Getting pre-approvedBecause to turn an estimate into a documented number.
Explore the full guide
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Guide
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Today's mortgage rates
Current PMMS 30-year and 15-year averages.
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Closing costs by state
Buy-side and sell-side totals to plug in.
Read the guide →Guide
Home value estimator
Start with a live AVM on your target property.
Read the guide →Internal library
Related mortgage guides across our library
Follow the next relevant guide for your scenario.
Start My Approval
Complete this short request and a Simply Approved Mortgages Loan Officer will personally review your scenario. The form only asks what your program actually needs. Submitting it is not an application for credit and is not a commitment to lend.
What are you looking to do?
Pick one — the form adapts.Pick a loan type
Programs for buying a home.Conventional loan — 3–20% down · 620+ FICO
Tell us about your scenario
The form below is tailored to Conventional loan — only the questions and documents your program needs.
Simply Approved Mortgages LLC is licensed to arrange residential mortgage loans in Florida and Colorado only. We ask first so we never collect a mortgage inquiry we are not licensed to act on.
Purchase price and down payment help us size the conforming loan.
A range is enough here — no credit report is pulled and your credit is not affected.
Illustrative estimate only — not a quote, rate lock, offer of credit, or commitment to lend.
Submitting this form is not an application for credit and is not a commitment to lend. No credit report is pulled at this step.
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Simply Approved Mortgages LLC | NMLS #2620881
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Equal Housing Opportunity
Broker identification. Simply Approved Mortgages LLC is a mortgage broker and is not a direct lender. We arrange residential mortgage loans with third-party wholesale lenders and do not make the lender's final credit decision or fund the loan. We arrange residential mortgage loans in Florida and Colorado. Business-purpose mortgage products may be arranged in additional states only where permitted by applicable law and pursuant to applicable licensing requirements or exemptions.
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