Quick answer
With our US defaults, a $420,000 home has a $2,080 mortgage payment, almost the same as $2,100 rent. But owning costs about $3,007 a month once tax, insurance and maintenance are added, and after 10 years renting finishes around $41,000 ahead. Compare rent to the full cost of owning and the return your down payment would forgo, not to the mortgage alone.
Is a mortgage cheaper than rent?
A mortgage payment is often close to rent, but owning a home almost always costs more each month than the mortgage alone. With our US defaults, the mortgage on a $420,000 home is about $2,080 a month against $2,100 rent. The true monthly cost of owning is about $3,007, and over 10 years renting comes out roughly $41,000 ahead. A rent vs mortgage calculator is only useful if it counts everything the payment leaves out. This one does.
Comparing rent to a mortgage payment is how most people start, and itâs the most common mistake in the rent or buy decision. Rent is your whole housing cost. A mortgage payment isnât.
How to use the rent vs mortgage calculator
- Enter the home and its comparable rent. Use the same property, or two very similar ones.
- Enter your actual mortgage quote. The 6.3% default is a long-run assumption. Freddie Macâs Primary Mortgage Market Survey put the 30-year fixed average at 7.18% for the week of 5 November 2026.
- Read the monthly payment first, then ignore it. The monthly payment output is there so you can check it against a lenderâs quote. The decision rests on the net worth comparison and the break-even rent.
- Check total unrecoverable costs. This output adds up everything you pay and never get back: interest, property tax, insurance, maintenance, closing costs and selling costs for the owner, and rent for the renter.
Worked example: same payment, different outcome
The mortgage. A $420,000 home with 20% down leaves a $336,000 loan. At 6.3% over 30 years, the amortization formula P = L Ă r Ă· (1 â (1 + r)^ân), with r = 0.00525 and n = 360, gives about $2,080 a month. Thatâs $20 less than the $2,100 rent.
The first month, side by side:
| Monthly cost | Owner | Renter |
|---|---|---|
| Mortgage payment (principal + interest) | $2,080 | â |
| Property tax (1.1% a year) | $385 | â |
| Home insurance (0.55% a year) | $193 | â |
| Maintenance (1% a year) | $350 | â |
| Rent | â | $2,100 |
| Renterâs insurance | â | $15 |
| Total | ~$3,007 | ~$2,115 |
The owner pays about $890 more each month to start with. The calculator has the renter invest that difference, along with the $96,600 down payment and closing costs the renter didnât spend. Both households are spending exactly the same cash each month. They just put it in different places.
Where the money goes over 10 years
| 10-year total | Owner | Renter |
|---|---|---|
| Mortgage interest | ~$197,000 | â |
| Principal repaid (builds equity) | ~$53,000 | â |
| Property tax | ~$55,000 | â |
| Maintenance | ~$50,000 | â |
| Home insurance | ~$28,000 | â |
| Closing costs (3%) | ~$12,600 | â |
| Selling costs (6% of sale price) | ~$35,500 | â |
| Rent paid | â | ~$296,000 |
The ownerâs unrecoverable costs (everything except principal) add up to roughly $378,000. The renterâs come to about $298,000 including insurance. Owners do get something renters donât: the home rises in value from $420,000 to about $592,000. Renters get investment growth on a starting portfolio of nearly $97,000.
The net result after 10 years is owner equity of about $273,500 against a renter portfolio of about $315,000. Renting leads by roughly $41,000, even though the mortgage was $20 cheaper than rent.
What rent equals a mortgage? Using the break-even rent
The most useful output for anyone comparing rent to a mortgage is the break-even rent. Thatâs the rent at which buying and renting leave you equally well off at your horizon. With the defaults over 10 years, itâs about $2,310.
That gives you a practical rule for this home. If you can rent something comparable for less than about $2,310, renting is the better financial choice. If comparable homes rent for more, buying is.
The break-even rent changes with the inputs that drive the result:
| Scenario (10-year horizon) | Mortgage payment | Break-even rent |
|---|---|---|
| Defaults (6.3%) | $2,080 | ~$2,310 |
| Rate 5.5% | $1,908 | ~$2,130 |
| Rate 7.18% (Nov 2026 average) | $2,276 | ~$2,510 |
| 10% down at 6.3% (no PMI) | $2,340 | ~$2,300 |
| Investment return 6% instead of 7% | $2,080 | ~$2,190 |
With 20% down and a 7% investment return, the break-even rent sits about $220 to $240 above the mortgage payment at every rate shown. Property tax, insurance and maintenance are large, but principal repayment and price growth claw much of them back. Whatâs left is roughly that gap. The last two rows show why thereâs no universal rule, though. A smaller down payment raises the mortgage but leaves less money missing out on investment returns, so the break-even rent ends up slightly below the payment. A lower expected investment return narrows the gap to about $110.
Rent to mortgage calculator: how much home does my rent buy?
Some people use a ârent to mortgage calculatorâ the other way round: âI pay $2,100 in rent. What could I afford to buy for the same money?â Hereâs the honest answer.
- Principal and interest only: at 6.3% over 30 years, $2,100 a month supports a loan of about $339,000.
- Full ownership cost: once you add 1.1% property tax, 0.55% insurance and 1% maintenance, the same $2,100 covers a home price of only about $293,000 with 20% down.
Thatâs around $130,000 less house than the payment-only figure suggests. Lendersâ affordability checks include tax and insurance, but they donât include maintenance. The calculator does, and so should your budget.
Why the monthly payment comparison misleads
It ignores costs outside the payment. Tax, insurance, maintenance and HOA fees can add 40% to 50% to a mortgage payment. See hidden costs of owning a home for the full list.
It ignores transaction costs. Buying and selling a US home commonly costs around 9% of its value between them. A short stay rarely recovers that.
It ignores opportunity cost. A $96,600 down payment invested at 7% would grow to roughly $190,000 in 10 years. That return is a real cost of buying.
It ignores what the payment buys you. Early on, most of a mortgage payment is interest. Later, most of it is principal, so the same payment builds more equity each year. A fixed-rate payment also stays flat while rent typically rises.
The last point is why owning gets more competitive the longer you stay. Our guide to the rent vs buy break-even point goes further into timing.
Fixed mortgage vs rising rent: how the gap closes over time
The rent vs mortgage comparison isnât fixed. A 30-year fixed payment stays at $2,080 for its whole life. Rent, property tax, insurance and maintenance all rise. Here are the yearly housing costs in the calculator with the US defaults:
| Year | Ownerâs housing cost that year | Renterâs housing cost that year | Who spends less |
|---|---|---|---|
| 1 | ~$36,300 | ~$25,400 | Renter by ~$10,900 |
| 5 | ~$37,900 | ~$29,100 | Renter by ~$8,800 |
| 10 | ~$40,400 | ~$34,600 | Renter by ~$5,800 |
| 15 | ~$43,300 | ~$41,100 | Renter by ~$2,200 |
| 20 | ~$46,700 | ~$48,800 | Owner by ~$2,100 |
| 30 | ~$55,600 | ~$68,800 | Owner by ~$13,200 |
Around year 18 the lines cross, and from then on the owner has spare cash to invest each month. Once the mortgage is paid off in year 31, the owner pays only tax, insurance and maintenance, while the renterâs rent keeps rising. This is the strongest argument for buying if you expect to stay for decades. Itâs also why a short-horizon comparison of rent against a mortgage payment looks so different from a long-horizon one. Use the horizon input to see both views before you decide.
Mortgage or rent: decision checklist
- Compare rent with the full monthly cost of owning, not with principal and interest.
- Use your real rate quote. Every 0.5% changes the payment by roughly $100 to $110 on this loan.
- Check whether comparable rent is above or below the break-even rent.
- Add PMI if youâre putting down less than 20%.
- Set the horizon to how long youâll actually stay.
- If youâd spend rather than invest the monthly difference, read renting and investing vs buying a house.
Related tools and reading
- Rent vs own calculator: the same engine, framed around long-term net worth.
- United States rent vs buy calculator: state-level notes and local assumptions.
- Is a mortgage cheaper than rent?: a longer explanation with more scenarios.
- How interest rates affect rent vs buy: what to do when rates move.
This page is educational, not financial advice. Get a written loan estimate before you make a decision.
Frequently asked questions
Is it smart to buy if my mortgage would be less than my rent?
Not automatically. The mortgage payment leaves out property tax, insurance, maintenance, HOA fees, closing and selling costs, and the investment return your down payment gives up. On a typical US home those extras come to about $925 a month before transaction costs. With our 10-year US defaults, the mortgage payment has to be roughly 10% below comparable rent just for the two options to break even.
How do I convert my rent into an affordable mortgage?
Work backwards from your total monthly housing budget, not from principal and interest alone. At 6.3% over 30 years, $2,100 a month covers principal and interest on about a $339,000 loan. Once 1.1% property tax, 0.55% insurance and 1% maintenance are included, the same $2,100 supports a home price of only about $293,000 with 20% down.
Which part of a mortgage payment builds wealth?
Only the principal. Interest is a cost, just like rent. In the first year of a $336,000 loan at 6.3%, about $21,000 of the roughly $25,000 you pay is interest. Over the first 10 years, interest totals about $197,000 and principal about $53,000. The rest of your equity comes from price appreciation.
What is the break-even rent?
It's the monthly rent at which renting and buying leave you with the same net worth at your chosen horizon. If you can rent a comparable home for less, renting wins. If comparable rent is higher, buying wins. With our US defaults over 10 years it's about $2,310, compared with a mortgage payment of $2,080.
Do higher mortgage rates always favour renting?
Usually, but not by themselves. At the 7.18% average Freddie Mac reported for early November 2026, the payment on a $336,000 loan rises to about $2,276 and the 10-year gap in renting's favour roughly doubles. Fast-rising rents or a low expected investment return can still tip things back toward buying. You can also refinance later if rates fall.
Does this calculator include PMI?
No. Private mortgage insurance usually applies in the US when you put down less than 20%, and it isn't modelled separately. If you put down less, add your PMI quote to the insurance input as a percentage of the home's value so the monthly comparison stays honest.