Methodology
Rent-vs-buy calculator assumptions and methodology
The calculator compares two estimated financial paths month by month: buying a home, or renting and investing the cash that buying would otherwise require.
Assumptions and source references reviewed September 16, 2026.
Market observations vs. scenario assumptions
On source-reviewed city pages, the starting home value, rent, property-tax estimate, and mortgage rate are dated observations or derived inputs. Home appreciation, future rent growth, investment return, maintenance, insurance, and transaction costs are modeling assumptions. Recent market movement is never automatically used as a forecast.
See the data sources, definitions, and update policy for source links and city-by-city inputs.
A fair starting point
The buyer begins with a down payment and purchase closing costs. The renter is assumed to invest that same amount. Each month, whichever option has the lower housing cost invests the difference. This keeps the comparison from treating the renter's unused upfront cash or either side's monthly savings as if they disappeared.
What buying includes
- Down payment and purchase closing costs
- Mortgage principal and interest
- Property tax, homeowners insurance, and maintenance
- Optional HOA and mortgage-insurance assumptions
- Home-price appreciation and sale costs
- Remaining mortgage balance when the modeled home is sold
What renting includes
- Monthly rent and renter's insurance
- Annual rent growth
- Investment growth on the avoided down payment and purchase costs
- Investment growth on months when renting costs less than owning
How the result is calculated
At the end of each month, the buying scenario equals estimated home sale proceeds after selling costs and the remaining mortgage, plus any monthly savings the buyer invested. The renting scenario equals the renter's modeled investment balance.
“Buying advantage” is the buying scenario value minus the renting scenario value. Break-even is the first month when buying catches up and remains at least tied through the rest of the selected period. This avoids reporting a temporary crossover that later reverses.
Default assumptions
| Assumption | Default |
|---|---|
| Down payment | 20% |
| Mortgage | 6.76% fixed for 30 years; Freddie Mac national average dated September 10, 2026 |
| Maintenance | 1% of modeled home value annually |
| Purchase / sale costs | 3% / 6% |
| Rent growth | 3% annually |
| Investment return | 5% annually |
| HOA / mortgage insurance | $0 / 0% initially; editable |
Source-reviewed city pages can supply a dated property-tax planning input. Homeowners insurance and appreciation remain explicit model assumptions. Advanced mode lets you edit every value, rerun the model, and copy a link that preserves the exact scenario. Shared links contain calculator numbers but no name or contact information.
Important limitations
- Future home prices, rents, and investment returns are unknown.
- The model uses nominal future dollars and assumes a sale at the end of the selected period.
- It excludes income-tax deductions, capital-gains tax, investment tax, moving costs, and mortgage refinancing.
- It does not determine affordability or whether a borrower qualifies for a mortgage.
The results are educational estimates, not a forecast or financial advice.