Quick answer
With our US defaults ($420,000 home, $2,100 rent, 6.3% 30-year fixed, 20% down), renting and investing the difference stays ahead over 10 years, and buying only wins if comparable rent is above roughly $2,300 a month. Higher property tax states and today's rates near 7% push the answer further toward renting; staying longer and cheaper taxes push it toward buying.
How do you use the rent vs buy calculator for the US?
Enter the price of the home you would actually buy, the rent on a comparable home, your mortgage rate and your state’s property tax rate — those four inputs decide most US rent vs buy answers. With our national defaults, renting and investing the difference finishes ahead of buying over 10 years, and buying only wins if a comparable rental costs more than roughly $2,300 a month.
This rent vs buy calculator for the USA runs a month-by-month simulation. The buyer pays the down payment and closing costs upfront, then a standard amortizing mortgage, property tax, insurance and maintenance, and receives the sale proceeds minus selling costs at the end. The renter pays rent and renters insurance, invests the cash the buyer spent upfront, and each month whoever has the lower housing bill invests the difference. That “same cash flow” approach is explained in full on our methodology page.
Why our US defaults are what they are
| Input | Default | Why |
|---|---|---|
| Home price | $420,000 | Close to the national median existing-home price |
| Monthly rent | $2,100 | A typical rent for a comparable single-family home or larger apartment |
| Mortgage rate | 6.3% | A mid-cycle 30-year fixed rate; see the rate note below |
| Term / down payment | 30 years / 20% | The standard conforming loan with no PMI |
| Property tax | 1.1% | Roughly the national average effective rate |
| Closing costs | 3% | Lender fees, title insurance, appraisal, recording |
| Selling costs | 6% | Agent commissions plus seller closing costs |
| Maintenance / insurance | 1% / 0.55% | Long-run repair budget and a homeowners policy |
| Appreciation / rent growth | 3.5% / 3.5% | Close to long-run US averages |
| Investment return | 7% | A diversified stock-heavy portfolio, after tax |
A note on rates: Freddie Mac’s Primary Mortgage Market Survey put the average 30-year fixed rate at 7.18% as of November 5, 2026, up from about 6.2% a year earlier. Our 6.3% default is deliberately a mid-cycle figure so the page does not swing every week, but if you are buying now, replace it with your actual quote. The PMMS average assumes a borrower with strong credit and 20% down, so your rate may be higher.
Worked example: renting vs buying a $420,000 US home
Here is what the calculator does with the defaults.
Upfront cash for the buyer: $84,000 down payment plus $12,600 closing costs = $96,600. The renter keeps this and invests it.
Monthly mortgage payment: A $336,000 loan at 6.3% over 30 years costs $2,080 a month in principal and interest, using the standard amortization formula M = P × r ÷ (1 − (1 + r)^−n), where r is the monthly rate (0.525%) and n is 360 payments.
Other owner costs in month one: property tax ($385), maintenance ($350) and homeowners insurance ($193) add about $928 a month. Total owner outflow: roughly $3,008 a month against $2,115 for the renter (rent plus $15 renters insurance). The renter invests the ~$890 gap every month.
Result after 10 years: the renter’s portfolio finishes roughly $40,000 ahead of the buyer’s home equity after a 6% selling cost. The break-even rent is about $2,300: if you can rent the same home for less than that, renting wins on these assumptions.
What flips it: at today’s 7.18% PMMS rate, the payment rises to about $2,276 and renting’s lead roughly doubles. In the other direction, cutting the selling cost to 5% or living in a state with 0.5% property tax narrows the gap considerably. The 5% rule gives the same direction at a glance: $420,000 × 5% ÷ 12 = $1,750, and since rent ($2,100) is above that, buying looks reasonable on the quick test — but the full simulation, with 20% down tying up capital at a 7% return, is stricter.
What does it really cost to buy and sell a home in the US?
| Cost | Typical range | Who pays | How to enter it |
|---|---|---|---|
| Down payment | 3–20%+ | Buyer | Down payment % |
| Lender fees, appraisal, title, recording | 2–5% of price | Buyer | Closing costs % |
| Prepaid taxes and insurance (escrow) | 2–6 months | Buyer | Not a true cost; ignore |
| Private mortgage insurance (PMI) | Often ~0.3–1.5% of the loan per year | Buyer, under 20% down | Add to insurance % |
| Agent commissions | Commonly ~5–6% total | Usually seller | Selling costs % |
| Transfer taxes | 0% to 1%+ depending on state/city | Varies | Add to buying or selling costs |
PMI: the cost of putting less than 20% down
Private mortgage insurance protects the lender, not you. On a conventional loan it can usually be cancelled once you reach 20% equity and drops off automatically at 22% under the federal Homeowners Protection Act. If you put 10% down on the default home, your loan is $378,000, the payment rises to about $2,340, and PMI adds to that. Model it by raising the insurance input until you expect to hit 20% equity. FHA loans charge mortgage insurance differently and often for the life of the loan.
Selling costs after the 2024 NAR settlement
Since August 17, 2024, listings on MLS services can no longer advertise compensation for buyer’s agents, and buyers must sign written agreements with their agents. The change made commissions more visibly negotiable, but data from brokerages and industry trackers through 2026 suggests total commissions have fallen only modestly, if at all, and many sellers still offer to pay the buyer’s agent. That is why we keep 6% as the default selling cost. If you plan to use a flat-fee or discount broker, try 4–5% and watch how much the break-even year moves.
How do taxes change the US rent vs buy decision?
Property tax is the biggest tax variable. Effective rates range from about 0.3% of value in Hawaii to more than 2% in New Jersey and Illinois. On a $420,000 home that is the difference between roughly $1,300 and $8,400 a year — enough on its own to change the verdict. Texas has no state income tax but high property taxes; California’s Proposition 13 keeps tax tied to purchase price, so long-time owners pay low effective rates while new buyers pay around 1.1–1.25% of what they paid.
The mortgage interest deduction helps fewer buyers than people think. Interest on up to $750,000 of acquisition debt is deductible only if you itemize. With the 2026 standard deduction at about $32,200 for joint filers, a couple paying $21,000 of first-year interest and $4,600 of property tax on the default home would still take the standard deduction unless they have large state income taxes or charitable gifts. The cap on deducting state and local taxes (SALT) was raised to $40,000 for 2025 and rises slightly in later years, with a phase-down for higher incomes, which makes itemizing more common in high-tax states. Mortgage insurance premiums also became deductible again from 2026 for itemizers, subject to income limits. Our calculator ignores all of this, so treat it as a conservative estimate for buyers who itemize.
Capital gains: married couples can exclude up to $500,000 of gain on a primary residence ($250,000 if single) after living there two of the last five years. Most buyers will not owe tax on the sale, which keeps the comparison simple.
How do inputs change across US cities?
The national defaults hide huge regional differences. A few reference points:
- New York City: prices and rents are far higher, co-op maintenance or condo common charges are significant, and buyers face mansion tax above $1 million. The New York City preset on our country and city hub starts around $850,000 with $1,200 a month in fees. Renting usually wins over 10 years.
- San Francisco Bay Area and Los Angeles: very high price-to-rent ratios (often 25–35) mean renting and investing typically wins unless you stay 15 years or more.
- Austin and Dallas: moderate prices but property taxes near 2% in many Texas counties. Raise the property tax input before trusting the result.
- Chicago: Cook County effective tax rates are among the highest in the country, while prices are moderate; the result is often close.
- Cleveland, Pittsburgh, Memphis: lower price-to-rent ratios (often under 15). Buying tends to break even within five to seven years.
To compare a specific metro, divide the home price by annual rent. That is the price-to-rent ratio: under 15 tends to favour buying, over 20 tends to favour renting.
When does renting win, and when does buying win, in the US?
Renting tends to win when:
- You expect to move within five to seven years, because 3% to buy and ~6% to sell take years to recover.
- The price-to-rent ratio is above about 20, which is common in coastal cities.
- Your mortgage rate is near or above 7% and you would invest the savings consistently.
- You live in a high property tax county and will not itemize.
Buying tends to win when:
- You plan to stay 10 years or more and value stability.
- Local rents are high relative to prices, or rents are rising faster than 3.5% a year.
- You can lock a fixed rate you are comfortable with, knowing you can refinance if rates fall — a one-way option renters do not have.
- You would not otherwise invest the down payment and monthly difference; forced saving through principal repayment is real.
For a deeper look at the investing side, see renting and investing vs buying, and for how rate moves change the maths, read how interest rates affect rent vs buy.
US rent vs buy checklist
Before you rely on the result, work through these:
- Replace the rate with a real quote, not the PMMS average.
- Look up the effective property tax on a comparable home in your county.
- Add PMI to insurance if you are putting down less than 20%.
- Add HOA dues if you are buying a condo or a home in an association; see our condo calculator.
- Check homeowners insurance quotes — premiums in Florida, California and along the Gulf Coast can be several times the 0.55% default.
- Set the horizon to how long you realistically expect to stay, and look at the break-even year.
- Be honest about investing. If you would spend the monthly difference, lower the investment return.
- Compare the break-even rent with real listings for the same size and neighborhood.
This calculator is an educational tool, not financial advice; run your final numbers past a lender or adviser.
Frequently asked questions
Is it cheaper to rent or buy in the US right now?
In most large US metros in late 2026, renting a comparable home costs less per month than owning it once you add mortgage interest, property tax, insurance and maintenance. Buying can still build more wealth if you stay long enough for appreciation and principal repayment to outrun the upfront and selling costs, which typically takes seven to ten years or more at current rates.
Does this rent vs buy calculator include the mortgage interest deduction?
No. The calculator does not model tax deductions. Most US households take the standard deduction, which in 2026 is about $32,200 for married couples filing jointly, so many buyers get little or no extra benefit from itemizing mortgage interest and property tax. If you will itemize, you can approximate the benefit by lowering the property tax input slightly.
How do I add PMI to the calculator?
PMI usually applies on conventional loans when you put down less than 20%. Add the annual premium as a percentage of the home value to the insurance input. For example, PMI of 0.6% of a $378,000 loan is about $2,270 a year, or roughly 0.54% of a $420,000 home, so you would raise insurance from 0.55% to about 1.1% until PMI is removed.
What selling costs should I use after the NAR settlement?
Our default is 6% of the sale price, covering agent commissions plus transfer taxes and other closing costs. Since the August 2024 rule changes, commissions are more negotiable, but industry data through 2026 shows total commissions have stayed close to 5–6% on average. If you have a quote for a lower-fee listing, reduce the selling cost input.
What property tax rate should I enter for my state?
Use your county's effective rate, which is the annual tax bill divided by market value. It ranges from roughly 0.3% in Hawaii to over 2% in New Jersey and Illinois. Look up the tax bill on a comparable home in the county assessor's records and divide it by the home's price for the most accurate input.
How long do I need to stay in a home for buying to beat renting in the US?
It depends on the price-to-rent ratio, your mortgage rate and local property tax. With our national defaults, buying does not overtake renting within 10 years. In lower-cost Midwest and Southern metros where rents are high relative to prices, buyers often break even in five to seven years. Enter your own numbers to find your break-even year.