Methodology

The model: same money, two choices

Two households start with the same cash and the same monthly housing budget. The buyer spends the down payment and closing costs on a home; the renter invests that same cash on day one. Then, every month:

• Cost of owning = mortgage payment + property tax + insurance + maintenance + HOA + PMI − tax savings (only if you itemize).
• Cost of renting = rent + renter's insurance.
• Both investment accounts grow by one month's return; then whichever household spent less on housing invests the difference. Early on that is usually the renter. Once rising rent overtakes the fixed mortgage payment, it's the buyer.

At the end of each year we work out what each household would have if it stopped there:

• Buyer = home value − remaining loan − selling costs − capital gains tax on the home + the buyer's investments after capital gains tax.
• Renter = the renter's investments after capital gains tax.

The difference at the end of your stay is the headline result.

• Break-even year: if buying wins, the year from which it stays ahead through the end of your stay. If renting wins, the first later year (up to 30) in which buying would be ahead. It's defined relative to your stay because the lead can change hands more than once.
• Break-even rent: the starting rent at which both come out even over your stay. The buyer's lead only grows as rent rises, so it is found exactly by bisection. If even a rent of 3% of the price a month wouldn't make buying win, we say so.
• What would change the answer: the same comparison with one assumption changed — price growth ±1.5 points, a 1-point lower rate, investment return ±2 points, rent growth +1 point, or a stay 5 years shorter or longer.

Formulas and timing

• Mortgage: fixed-rate, monthly payment = L·r / (1 − (1 + r)⁻ⁿ), with r = annual rate ÷ 12 and n = term × 12. Each month's interest is the balance × r; the rest of the payment reduces the balance.
• Home value grows every month at the monthly equivalent of the annual growth rate, (1 + g)^1/12 − 1. Investments compound the same way at their own rate.
• Property tax, insurance and maintenance are percentages of the home's value at the start of each year, so they rise as the home appreciates.
• Rent rises once a year, at lease renewal. HOA fees and renter's insurance rise with inflation.
• PMI applies when the loan is above 80% of the price, charged on the original loan, and stops once the balance falls to 78% of the purchase price (automatic cancellation under the Homeowners Protection Act).
• Selling costs are a percentage of the sale price.
• Capital gains on the home = sale price − selling costs − (purchase price + closing costs). Up to $250,000 (single) or $500,000 (married filing jointly) is tax-free once you've owned and lived in the home for at least 2 years (IRS Publication 523); anything above is taxed at your capital gains rate.
• Capital gains on investments = account value − everything paid in, taxed at your capital gains rate when you cash out (a regular taxable account).
• Tax savings, only if you itemize = (interest on up to $750,000 of mortgage debt + property tax up to the SALT cap) × your marginal rate. The SALT cap follows current law: $40,400 in 2026, rising 1% a year to 2029, then $10,000 from 2030. This is an upper bound: it assumes your other deductions already exceed the standard deduction and ignores state income taxes that also count toward the cap and the cap's phase-down above $500,000 of income.
• Today's dollars: an amount in year t ÷ (1 + inflation)^t.

Default assumptions

Local data

From the U.S. Census Bureau's American Community Survey 5-year estimates (2020–2024) for 3,134 counties, 21,664 cities, towns and census-designated places, and 24,884 ZIP Code Tabulation Areas. Areas without published medians for both home value and rent are left out.

• Median home value (table B25077): owners' own estimates of what their home would sell for.
• Median gross rent (B25064, and by bedrooms B25031): rent plus utilities, across all current renters — new leases are usually higher.
• Effective property tax rate = aggregate real estate taxes paid (B25090) ÷ aggregate value of owner-occupied homes (B25082). Where a city or ZIP has fewer than 100 owner homes, its county's rate is used (or the state's, where the county has none); the page says when.
• Capped figures: the Census Bureau publishes medians above $2,000,000 (home value), $3,500 (rent) and $250,000 (income) as “or more”. We show them that way and warn that the true figure is higher. Bottom-coded values (“$10,000 or less”, “$100 or less”) are dropped.
• Reliability: every median comes with a 90% margin of error. If the margin for home value or the default rent implies a coefficient of variation above 30%, we flag the area as a small sample. We also skip an unreliable 3-bedroom figure in favor of a reliable 2-bedroom or all-rentals one, and warn when an area has very few renters.
• 5-year changes compare with the non-overlapping 2015–2019 survey. 2015–2019 home values are converted to 2019 dollars with CPI-U because the Census Bureau did not inflation-adjust 5-year home values before the 2018–2022 release. Changes involving a capped figure are not shown.
• ZIP codes are matched to their main county and city, and cities to their main county, with the Census Bureau's 2020 relationship files.

What the calculator leaves out

• Assessment caps and homestead exemptions (such as California's Prop 13 or Florida's Save Our Homes), and rent control. Both can make one side cheaper than shown.
• Refinancing, adjustable-rate mortgages, moving costs and security deposits.
• State income tax on investment gains, and tax-advantaged accounts such as 401(k)s and IRAs.
• The value of stability, control or flexibility, which can rightly outweigh a modest financial difference.

This is an educational tool, not financial advice. Please check numbers that matter with a lender, tax professional or financial adviser.