What is the US Rent vs Buy?
The rent-versus-buy decision hinges on how long you stay. Buying carries large one-off costs — roughly 3% to buy and 6% to sell — which need years of appreciation and equity build-up to recover.
A fair comparison invests the down payment and any monthly difference in the renting scenario, then compares total wealth at the end.
Formula & worked example
Renting wealth = (down payment + monthly savings) compounded at investment return
Worked example: a $420,000 home with $84,000 down at 6.75%, staying 7 years, versus renting at $2,200. Owning costs about $2,180 P&I plus roughly $1,015 in taxes, insurance and upkeep. After 7 years at 3.5% appreciation you hold about $197,250 of net equity — but you also paid $152,106 in interest and 6% in selling costs. Renting and investing the difference builds a pot of about $244,487, meaning renting comes out ahead by roughly $47,000 over this horizon. Stay longer and the gap closes, then reverses.
How to use this us rent vs buy calculator
- Enter the home price and your down payment.
- The single most important input is years you will stay.
- Enter rent for a genuinely comparable property.
- Be conservative on appreciation — 3–4% is the long-run US average.
Smart tips
- The rule of thumb is 5 years minimum. Below that, transaction costs usually make renting cheaper.
- Selling costs of 6% (agent commissions) are the single largest hidden expense of owning.
- Budget 1% of home value annually for maintenance, plus property tax and insurance of roughly 1.5–2%.
- The renting case only works if you genuinely invest the difference rather than spending it.
- Owning offers real non-financial value: stability, control and protection from rent increases.
Frequently asked questions
How long should I plan to stay before buying?
At least 5 years for most markets. Transaction costs of roughly 9% round-trip need time and appreciation to recover.
Does this include tax deductions?
No. Mortgage interest and property tax deductions help if you itemise, though the higher standard deduction means most filers no longer do.
Why is renting sometimes better financially?
Because the down payment invested elsewhere can compound faster than home equity, especially in low-appreciation markets with high transaction costs.
What appreciation rate should I assume?
3–4% is the long-run US average. Assuming 6%+ makes buying look far better than it reliably is.
Want the theory behind the numbers? Read our home buying guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 30 Sep 2026. How we check these numbers.