"Rent is dead money" is only half true. Mortgage interest, property tax, insurance, upkeep and the costs of buying and selling don't build wealth either. The real question is how long you'd stay, and what the money would do if you didn't put it into a house. Here's how to work it out, with US and UK examples.
To run your own numbers, use the rent vs buy calculator.
How to compare renting and buying fairly
Start both paths with the same money. The buyer spends the down payment and closing costs; the renter invests them. Then each month, whichever is cheaper invests the difference. After any number of years, compare net worth:
- Buying: the home's value, less what it costs to sell, less the mortgage left, plus anything invested in months when owning was cheaper.
- Renting: the invested down payment and closing costs, plus the monthly savings, with growth.
The year buying moves ahead and stays ahead is the break-even point. Stay longer and buying wins; move sooner and renting does.
A US example
A $400,000 home with 20% down ($80,000) and a 30-year mortgage at 6.5%, against renting a similar home for $2,200 a month. Assumptions: closing costs 3%, property tax 1% a year, insurance $1,800 a year, maintenance 1% a year, selling costs 6%, home prices and rents both rising 3% a year, and savings earning 5%.
Owning costs about $2,839 in the first month ($2,023 of mortgage payment plus tax, insurance and upkeep), against $2,215 for rent and renter's insurance. Here's the gap in net worth (buying minus renting):
| Scenario | Break-even | After 5 years | After 10 years | After 20 years |
|---|---|---|---|---|
| As above | Year 8 | −$17,959 | +$17,669 | +$173,712 |
| Home prices rise 1% a year | Year 20 | −$56,438 | −$61,867 | +$10,215 |
| Home prices rise 5% a year | Year 4 | +$23,707 | +$113,199 | +$420,719 |
| Investments earn 7% | Year 17 | −$31,540 | −$21,977 | +$23,463 |
| Mortgage rate 5.5% | Year 6 | −$329 | +$56,573 | +$267,894 |
| Rent $1,800 a month | Never (in 20 years) | −$46,679 | −$52,279 | −$34,231 |
| Rent $2,600 a month | Year 5 | +$10,761 | +$87,617 | +$381,656 |
| 10% down instead of 20% | Year 9 | −$21,497 | +$9,887 | +$154,980 |
A minus sign means renting is ahead. The answer swings hugely with house price growth and with how expensive buying is compared with renting the same home. A common check is the price-to-rent ratio: price ÷ a year's rent. Here it's $400,000 ÷ $26,400 ≈ 15. The higher it is, the more renting tends to win.
A UK example
A £300,000 first home in England with a 10% deposit and a 25-year mortgage at 4.5%, against £1,300 a month rent. First-time buyers pay no Stamp Duty up to £300,000, so buying costs are about £2,500 of legal and survey fees. Assumptions: insurance £400 a year, maintenance 1%, selling costs 2%, prices and rents rising 3%, savings earning 5%.
Owning costs about £1,784 in the first month (a £1,501 mortgage payment plus insurance and upkeep), against £1,300 rent. Even so, with prices rising 3% a year buying is ahead from year 2 and by about £92,000 after 10 years, because a 10% deposit is leveraged: every 3% rise in price is 30% of the deposit.
- As a home mover paying £5,000 of Stamp Duty instead, break-even is still year 2, but you're about £84,000 ahead after 10 years instead of £92,000.
- If prices rise 1% a year, break-even moves to year 5.
- If prices don't rise at all, it takes 11 years.
- If rent is only £1,000 a month, it's year 3.
Council tax is left out because owners and renters both pay it. In Scotland and Wales, LBTT or LTT replaces Stamp Duty; the Stamp Duty calculator works out all three.
What usually decides it
- How long you'll stay. Buying and selling costs need years to earn back. If you might move within 3 to 5 years, renting is often the safer choice.
- House price growth. It's the biggest unknown, and leverage amplifies it both ways. Test a low-growth case before you commit.
- Rent versus the cost of owning the same home. Compare like for like, including property tax, insurance, HOA dues or service charges and upkeep.
- What your savings would earn. Higher returns favour renting and investing, but only if you actually invest the difference.
Run your own figures with the rent vs buy calculator, check the price you could afford with the affordability calculator, and plan the deposit with the savings goal calculator.
Figures from our rent vs buy calculator with the assumptions shown. Illustrations, not financial advice: house prices and investments can fall as well as rise. Investment tax and the US mortgage interest deduction aren't included. Last reviewed October 2026.