What is Monte Carlo simulation and why does it matter for rent vs buy?

Monte Carlo simulation runs thousands of random scenarios — each with different home appreciation rates, stock returns, and rent growth — to produce a distribution of outcomes rather than a single answer. It matters because the single biggest driver of the rent vs buy decision (home appreciation) is highly uncertain. Presenting "buying wins after 7 years" as a fact hides the reality that appreciation could be 1%/year or 6%/year. Monte Carlo makes that uncertainty explicit and honest.

How is this calculator different from the NYT rent vs buy calculator?

The NYT calculator is one of the best-designed financial tools built for consumers — honest, comprehensive, and thoughtfully executed. It's now behind the NYT paywall. This calculator is free, open to everyone, and adds Monte Carlo uncertainty modeling (which the NYT tool doesn't have), full SALT cap handling, and a shareable URL for scenarios. The core math is similar; the presentation layer and probabilistic framing are different.

Does the mortgage interest deduction actually save me money?

Often no — especially after the 2017 tax law changes. To benefit from the mortgage interest deduction, your total itemized deductions (mortgage interest + SALT-capped property/state tax + other deductions) must exceed your standard deduction ($15,700 single / $31,500 married in 2026). Many moderate-income homeowners find their itemized total is below the standard deduction, meaning the mortgage interest deduction provides zero extra tax benefit. The Tax Insights tab shows the exact calculation for your situation.

What is the SALT cap and who does it affect most?

SALT (State and Local Taxes) deductions are capped at $10,000 combined (property tax + state income tax). This cap hits hardest in high-tax states: California (9.3% income tax), New York (6.85%), New Jersey (10.75%), Connecticut (6.5%), and Massachusetts (5%). A homeowner in California paying $8,000 in property tax and $15,000 in state income tax has $23,000 in SALT taxes but can only deduct $10,000 — losing $13,000 in deductions. The calculator accounts for this by state.

How does opportunity cost work in this calculator?

The renter scenario assumes the full down payment plus buying closing costs are invested from day one at the assumed stock return rate. Monthly savings (when rent costs less than the equivalent monthly cost of buying) are also invested each year. This is the financially correct comparison — the buyer foregoes those returns by tying capital up in real estate. The Cost Breakdown tab shows the estimated investment gain on the down payment for comparison.

What does "median breakeven year" mean?

In 50% of the Monte Carlo simulation paths, buying first outperforms renting by that year. In the other 50% of paths, it takes longer — or never happens within the holding period. The breakeven histogram shows the full distribution. If you're planning to stay 8 years and the P50 breakeven is year 9, you have a coin-flip chance of buying outperforming renting.

Does this account for the capital gains exclusion on home sale?

Yes. If you've owned and lived in your primary residence for 2+ of the last 5 years, you can exclude $250,000 (single) or $500,000 (married) of capital gains from the sale. This is modeled in the terminal calculation. For most homeowners holding 5–15 years, this exclusion eliminates all or most capital gains tax on the home sale.

Is my financial data saved or uploaded anywhere?

No. All calculations run entirely in your browser using a Web Worker. No data is ever uploaded to a server. The shared URL encodes your inputs using URL compression (lz-string) — the data exists only in the URL itself, with no server storage. You can verify this by checking that the tool works with no network connection after the initial page load.

Rent vs Buy Calculator

The only free rent vs buy calculator with Monte Carlo uncertainty modeling, SALT cap, standard vs itemized analysis, and capital gains exclusion — 5,000 scenarios, no paywall.

Last updated: April 2026

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Rent vs Buy Calculator 2026

Updated with 2026 mortgage rates and current tax law

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Opportunity Cost Deep Dive

Why your down payment's hidden cost matters more than you think

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Tax Deductions Guide

SALT cap, standard vs itemized, and capital gains exclusion explained

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Breakeven Calculator

How many years until buying outperforms renting in your scenario

What it does

Monte Carlo simulation — 5,000 paths

Runs 5,000 independent scenarios with realistic variability in home appreciation, stock returns, and rent growth. Produces a probability of buying winning — not a misleading single number.

Full US tax modeling

Standard vs itemized deduction comparison, $10K SALT cap, $750K mortgage interest deduction principal cap, capital gains exclusion on home sale ($250K/$500K), and long-term capital gains rates by income bracket.

Opportunity cost of down payment

Renter scenario invests the down payment + closing costs from day one at your assumed stock return rate. Monthly savings difference is invested or liquidated dynamically each year.

Breakeven distribution histogram

Shows when buying first outperforms renting across all 5,000 paths — not just the median. Includes a "never" bar for paths where buying never wins within the holding period.

Shareable URL scenarios

Share your exact scenario via URL (lz-string compressed, no server storage). Send to a partner, financial advisor, or for your own records.

Privacy-first, 100% client-side

All computation runs in a Web Worker in your browser. No data is uploaded, no account required, no paywall. Works offline after initial load.

How to use Rent vs Buy Calculator

1
Enter the Quick Start inputs
Home price, monthly rent for an equivalent place, down payment %, mortgage rate, how long you plan to stay, and your household income. These 8 inputs are enough to get a credible result.
2
Optionally expand the Tier 2 sections
Refine ownership costs (property tax, HOA, maintenance, PMI), transaction costs (buying + selling), and your tax situation (filing status, state, other deductions).
3
Run Monte Carlo simulation
Toggle Monte Carlo on (default: on) to run 5,000 scenarios with realistic variability in home appreciation, stock returns, and rent growth. Takes under a second.
4
Read the probabilistic result
The hero result shows the percentage of scenarios where buying wins, median net worth for both outcomes, and the P10–P90 range. Use the tabs to explore the fan chart, breakeven distribution, and tax analysis.
5
Share your scenario
Click "Share scenario" to copy a URL that encodes your exact inputs. Send it to a partner or financial advisor to review the same analysis.

When to use this

First-time homebuyer in 2026

Enter the asking price of a home you're considering with your quoted mortgage rate. The breakeven distribution shows whether your planned 5–7 year timeline typically produces a better outcome from buying or renting in this rate environment.

FIRE community modeling renting + investing

Set stock return to 7% and home appreciation to 3.5%. The comparison often shows renting winning for shorter timelines when the down payment invested in index funds compounds aggressively.

Relocating to a new city

Set your target city's typical home price, your expected rent, and a 3–5 year timeline (typical relocation uncertainty). Compare probability of buying winning over that uncertain horizon.

High-tax state SALT cap analysis (CA, NY, NJ)

Enter California with a $900K home and 1.1% property tax. The Tax Insights tab shows the full SALT cap impact — you'll see how much of your $20K+ in state + property taxes gets lost to the $10K cap.

Looking for a free NYT rent vs buy alternative

This calculator covers all the factors the NYT calculator models, adds Monte Carlo probability output, is free with no subscription required, and produces shareable URLs for scenario collaboration.

Why deterministic rent vs buy calculators are misleading

The typical free rent vs buy calculator presents a single answer: "After 7 years, buying wins by $47,000." This is misleading because it hides the enormous uncertainty in the key inputs. Home appreciation has ranged from -20% to +25% in a single year in major US markets. Stock returns have ranged from -40% to +50%. The "average" scenario is one data point in a wide distribution. A calculator that only shows the average answer is like a weather forecast that only says "average temperature is 65°F" — technically true, but useless for deciding whether to bring an umbrella. Monte Carlo respects this uncertainty by showing the full distribution of outcomes.

The SALT cap changed the rent vs buy math for half of America

Before the 2017 TCJA, homeownership had a genuine and substantial federal tax advantage: you could deduct unlimited property taxes and state income taxes. In California, a homeowner with a $1M home paying $11,000 in property tax and $20,000 in state income tax could deduct $31,000 in SALT alone. Today, that same homeowner can deduct only $10,000. The remaining $21,000 in taxes provides zero federal deduction benefit. Combined with the higher standard deduction, this means most homeowners in CA, NY, NJ, CT, MA, OR, and MN get significantly less federal tax benefit from homeownership than they did in 2017. This calculator shows the exact impact for your state.

Frequently Asked Questions

What is Monte Carlo simulation and why does it matter for rent vs buy?: Monte Carlo simulation runs thousands of random scenarios — each with different home appreciation rates, stock returns, and rent growth — to produce a distribution of outcomes rather than a single answer. It matters because the single biggest driver of the rent vs buy decision (home appreciation) is highly uncertain. Presenting "buying wins after 7 years" as a fact hides the reality that appreciation could be 1%/year or 6%/year. Monte Carlo makes that uncertainty explicit and honest.
How is this calculator different from the NYT rent vs buy calculator?: The NYT calculator is one of the best-designed financial tools built for consumers — honest, comprehensive, and thoughtfully executed. It's now behind the NYT paywall. This calculator is free, open to everyone, and adds Monte Carlo uncertainty modeling (which the NYT tool doesn't have), full SALT cap handling, and a shareable URL for scenarios. The core math is similar; the presentation layer and probabilistic framing are different.
Does the mortgage interest deduction actually save me money?: Often no — especially after the 2017 tax law changes. To benefit from the mortgage interest deduction, your total itemized deductions (mortgage interest + SALT-capped property/state tax + other deductions) must exceed your standard deduction ($15,700 single / $31,500 married in 2026). Many moderate-income homeowners find their itemized total is below the standard deduction, meaning the mortgage interest deduction provides zero extra tax benefit. The Tax Insights tab shows the exact calculation for your situation.
What is the SALT cap and who does it affect most?: SALT (State and Local Taxes) deductions are capped at $10,000 combined (property tax + state income tax). This cap hits hardest in high-tax states: California (9.3% income tax), New York (6.85%), New Jersey (10.75%), Connecticut (6.5%), and Massachusetts (5%). A homeowner in California paying $8,000 in property tax and $15,000 in state income tax has $23,000 in SALT taxes but can only deduct $10,000 — losing $13,000 in deductions. The calculator accounts for this by state.
How does opportunity cost work in this calculator?: The renter scenario assumes the full down payment plus buying closing costs are invested from day one at the assumed stock return rate. Monthly savings (when rent costs less than the equivalent monthly cost of buying) are also invested each year. This is the financially correct comparison — the buyer foregoes those returns by tying capital up in real estate. The Cost Breakdown tab shows the estimated investment gain on the down payment for comparison.
What does "median breakeven year" mean?: In 50% of the Monte Carlo simulation paths, buying first outperforms renting by that year. In the other 50% of paths, it takes longer — or never happens within the holding period. The breakeven histogram shows the full distribution. If you're planning to stay 8 years and the P50 breakeven is year 9, you have a coin-flip chance of buying outperforming renting.
Does this account for the capital gains exclusion on home sale?: Yes. If you've owned and lived in your primary residence for 2+ of the last 5 years, you can exclude $250,000 (single) or $500,000 (married) of capital gains from the sale. This is modeled in the terminal calculation. For most homeowners holding 5–15 years, this exclusion eliminates all or most capital gains tax on the home sale.
Is my financial data saved or uploaded anywhere?: No. All calculations run entirely in your browser using a Web Worker. No data is ever uploaded to a server. The shared URL encodes your inputs using URL compression (lz-string) — the data exists only in the URL itself, with no server storage. You can verify this by checking that the tool works with no network connection after the initial page load.

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