Rent vs Buy Calculator
Quick rent-vs-buy comparison. NAR median home price March 2026 is ~$408,800; Apartment List median rent ~$1,370. Use the 5% rule of thumb: if annual rent < 5% of home value, renting often wins; above 7%, buying typically wins.
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How to use
- 1 Enter the home purchase price you're considering (your real shopping price, not Zillow estimate).
- 2 Enter down payment percentage (20% standard to avoid PMI; 3-5% with FHA conventional 97; 10% common compromise).
- 3 Enter mortgage rate. Use 6.30% if unsure (PMMS 30-yr April 2026). Loan term 30 years (most common) or 15 years (faster payoff, lower rate).
- 4 Enter property tax rate (US average 1.10%; NJ 1.58%, IL 1.84%, TX 1.13%, HI 0.33% lowest). Enter annual home insurance ($2,490 default for $400K coverage).
- 5 Enter monthly rent for comparable apartment + annual renters insurance ($180 typical). Click Calculate to see monthly cost both ways and 5% Rule verdict.
About Rent vs Buy Calculator
FAQ
Q What is the 5% rule for buying vs renting?
A simple shortcut: if your annual rent is LESS than 5% of the home price, renting often wins. If MORE than 5%, buying typically wins. The 5% accounts for property tax (1%) + maintenance (1%) + opportunity cost of capital (3%). Created by Ben Felix.
Q Should I rent or buy in 2026?
Depends on your market. Coastal cities (SF, NYC, LA, Boston): rent ratio typically 3-4%, RENTING wins. Sun Belt and Midwest (TX, OH, IN): rent ratio often 6-8%, BUYING wins. Use the calculator with YOUR market's actual rent and price.
Q What is the average mortgage rate in 2026?
6.30% (Freddie Mac PMMS 30-year fixed, April 2026), edged up to 6.37% by May 2026. Down from 7.79% peak in Oct 2023. Most economists expect rates to stabilize around 6-7% through 2026 absent major Fed policy changes.
Q How much does home insurance cost in 2026?
NerdWallet 2026: $2,490/year average for $400K dwelling coverage. Bankrate: $2,543/year for $300K coverage. Insurify projects 4% increase in 2026 (after 12% jump in 2025). FL/CA wildfire/hurricane areas pay $4,000-$8,000+. Lowest: NH/VT/OR ~$700/yr.
Q Do I need 20% down to buy a home?
NO. FHA loans 3.5% down (with MIP), VA loans 0% down (eligible vets), USDA 0% down (rural), conventional Fannie HomeReady 3% down (with PMI), 5-10% down with PMI is common. 20% just avoids PMI ($150-$300/mo on a $400K home).
Q When does buying beat renting financially?
After ~5-7 years on average. Closing costs (2-5% of price), realtor commission (5-6% on sale), and maintenance need time to amortize. Coastal markets where appreciation is high but rent ratio is low: NEVER beats renting on cash flow alone (depends on appreciation).
Q How much should I budget for home maintenance?
Industry rule: 1-2% of home value per year for maintenance + repairs. A $400K home: $4,000-$8,000/year ($333-$667/mo). Includes roof ($15K every 25 yrs = $50/mo), HVAC ($8K every 15 yrs = $44/mo), water heater ($1.5K every 12 yrs = $10/mo), painting, landscaping.
Q Is the rent ratio different for condos vs houses?
Condos typically have HIGHER ratios (more affordable purchase) but HOA fees ($200-$1,000/mo) eat the math. Add HOA × 12 / price to your effective rent ratio. A $300K condo + $400/mo HOA at $1,800/mo rent = 7.2% nominal but only 5.6% after HOA — rent often wins.
Official resources
Freddie Mac — Primary Mortgage Market Survey (PMMS)
Official weekly 30-year mortgage rate average. Most-cited US mortgage benchmark.
Ben Felix — The 5% Rule Explained
Original Ben Felix YouTube video explaining the 5% rule for rent vs buy decisions.
NerdWallet — Average Home Insurance Cost
NerdWallet 2026 home insurance national and state average rates with state-by-state comparison.
NYT — Rent vs Buy Calculator
New York Times comprehensive rent vs buy calculator factoring tax deduction, appreciation, opportunity cost.