Rent or buy: buying wins in year 10. Or year 4. Or year 22
· 8 min read
On a $400,000 home against $2,200 a month in rent, the renter is worth more than the buyer for 9 years. Buying pulls ahead in year 10. Change one guess about the future by two points and that becomes year 4, or year 22.
This does not say whether you should rent or buy. Three of the inputs are guesses about the next 30 years, and nobody knows them. The rate, the prices and the growth figures are examples. This is arithmetic, not financial advice.
Is renting throwing money away?
Not on the arithmetic, and neither is buying a trap. Both slogans come from comparing the rent with the mortgage payment, and that comparison is wrong in both directions.
Part of a mortgage payment comes back when you sell, and rent does not, so buying looks worse than it is. But the renter still has the down payment, $80,000 here, invested and earning something, so renting looks worse than it is too.
The studies that make the news mostly compare monthly bills. Bankrate put the average monthly mortgage payment on a median-priced home, with property tax and insurance, at $2,768 and average rent at $2,000, and found renting cheaper each month in all 50 of the largest US metro areas. Bankrate, 2025 Rent vs. Buy Study, published 23 April 2025 and read at the page linked on 10 October 2026. It says it does not factor in the equity an owner builds, closing costs or maintenance. It answers which is cheaper this month, not which leaves you better off.
What to compare when deciding to rent or buy
What each household is worth at the end. Both start with the same cash, both spend the same amount every month, and whoever has money left over invests it. The buyer’s worth is what they would walk away with if they sold: the home’s value, less the cost of selling, less what is still owed.
The rent or buy calculator does that year by year. It is free, there is no account, and nothing you type leaves your browser. Our example is its starting inputs: $400,000 home, $80,000 down, 6.5% over 30 years, or $2,200 a month to rent a similar place.
How much more does owning cost each month than renting?
| First month of owning | Amount |
|---|---|
| Loan principal and interest | $2,022.62 |
| Property tax, 1.2% of value a year | $400.00 |
| Home insurance, $1,600 a year | $133.33 |
| Upkeep, 1% of value a year | $333.33 |
| Owning, first month | $2,889.28 |
Against $2,200 of rent, the renter has $689 left over in the first month and invests it, on top of the $80,000 they never put down and the $12,000 of closing costs they never paid.
How long do you have to live in a house for buying to be worth it?
On these numbers, 10 years. The table is what each would be worth at the end of the year.
| End of year | Buyer | Renter |
|---|---|---|
| 1 | $70,857 | $105,181 |
| 5 | $136,332 | $159,029 |
| 7 | $173,101 | $186,462 |
| 10 | $234,029 | $227,919 |
| 30 | $1,068,429 | $617,674 |
After one year of owning, the buyer is $34,325 behind. They paid 3% to get in, they would pay 6% to get out, and most of that first year’s loan payments were interest. The gap closes every year after that: $22,697 behind in year 5, $13,362 behind in year 7, then $6,110 ahead in year 10. Once the buyer is ahead the lead widens quickly, to $450,755 by year 30.
So on these numbers, leave before year 10 and renting came out ahead. Stay past it and buying did.
The three guesses that decide it
How fast home prices rise, how fast rent rises, and what invested money earns. The example uses 3%, 3% and 5% a year, held steady for 30 years. Those are guesses, not forecasts. Here is the break-even year when one of them is changed and everything else is left alone.
| What changes | Buying pulls ahead in |
|---|---|
| Nothing: the starting guesses | year 10 |
| Home prices rise 5% a year, not 3% | year 4 |
| Home prices rise 1% a year | year 22 |
| Investments earn 8% a year, not 5% | not within 30 years |
| Investments earn 2% a year | year 6 |
One number, moved two points either way, gives year 4 or year 22. With investments earning 8%, the renter is still ahead after 30 years. Any single break-even year, including ours, is only as good as the guesses under it.
At what rent does buying make sense?
The rent is the one input you can look up today, and it matters as much as any of the guesses.
| Rent for a similar place | Buying pulls ahead in |
|---|---|
| $1,800 a month | not within 30 years |
| $2,200 a month | year 10 |
| $2,800 a month | year 4 |
What to do with the number
Put in your price and the rent you would really pay. Then ask how long you expect to stay, and hold that against the break-even year. Then move each guess and see whether the answer survives. If it flips when home prices rise 2% instead of 3%, the calculator has not told you to buy or to rent. It has told you the answer depends on something nobody knows.
The monthly side of buying is covered line by line in a $200,000 mortgage is not $1,199 a month, and what the loan costs in total in a $400,000 mortgage costs $910,178.
What this does not tell you
- Whether you should rent or buy. It compares two sums of money on figures you choose.
- What home prices, rents or investments will do. Each is held at one steady rate for 30 years, and the real world does not do that.
- Anything about tax. There is no deduction for mortgage interest and no tax on investment gains.
- Mortgage insurance or renter’s insurance, which are left out. Home insurance is held flat.
- What happens if the renter spends the difference instead of investing it every month. That renter ends up with far less than this shows, and it is the biggest assumption here.
- What a home is worth to you beyond the money, or what being able to move is worth.
