What assumptions should a rent vs buy calculator use?
At minimum: home price, comparable rent, down payment, mortgage rate, years you'll stay, appreciation, rent growth, property tax, maintenance, insurance, buy and sell costs, and an investment return for the renter's cash. Any calculator that hides these is giving you an opinion, not a calculation.
Our default assumptions and their sources
| Assumption | Default | Source / basis |
|---|---|---|
| Home price | $420,000 | ≈2025 US median existing-home price (NAR) |
| Mortgage rate | 6.5% | Freddie Mac PMMS 30-yr range, 2025–2026 |
| Appreciation | 3.5%/yr | Long-run FHFA House Price Index average |
| Rent growth | 3.5%/yr | Long-run CPI shelter average |
| Property tax | 1.1% | Approx. national effective rate; varies by county |
| Maintenance | 1%/yr | Common planning rule of thumb |
| Closing / selling | 3% / 6% | Typical buyer fees / commission + transfer |
| Investment return | 6%/yr | Conservative diversified portfolio |
How to read this table
- Home price sits at the top of the table ($420,000) — ≈2025 us median existing-home price (nar). If your situation looks like this row, plan against the upper half of the range rather than the midpoint.
- Maintenance anchors the bottom (1%/yr) — common planning rule of thumb. Treat this as the conservative case you should still be profitable at.
- The gap between the top and bottom row is roughly 420000×. That spread is why a single blended average is close to useless here — pick the row that matches your setup instead of averaging the column.
- With 8 reference points in the "our default assumptions and their sources" table, the fastest way to use this page is to find the closest row, take its default, then stress-test it ±30% before you build a plan on it.
Context
The two assumptions with the largest effect are years you'll stay and the gap between appreciation and investment return. Run the calculator with pessimistic, central and optimistic values to see how robust your answer is.
What moves this number
Financing terms
Rate, down payment and amortisation drive cash-on-cash return more than purchase price does. The same building can cash-flow or bleed depending on the loan.
True operating expense ratio
Management, insurance, tax, maintenance, vacancy and capital reserve typically consume 35–50% of gross rent. Models that skip reserves overstate returns badly.
Vacancy and turnover
One 45-day vacancy plus a turn can erase a year of thin cash flow. Underwrite 5–8% vacancy even in tight markets.
Local regulation
Rent rules, short-term rental caps and licensing requirements change the achievable revenue of an identical property between neighbouring cities.
Methodology
Excluded deliberately: mortgage interest deduction (most filers take the standard deduction), capital-gains tax (the $250k/$500k exclusion covers most sellers) and PMI (lender- and credit-specific).
Assumptions and caveats
- Returns exclude appreciation and principal paydown unless a row states otherwise.
- Local tax, insurance and regulation can move these figures by several points in either direction.
- This page was last reviewed on 2026-10-01. Ranges are updated as new data lands, so re-check before using them in a contract or a plan.
- Use these numbers as a starting range, not a guarantee — your own historical data always beats a benchmark.
Frequently asked questions
What assumptions should a rent vs buy calculator use?
At minimum: home price, comparable rent, down payment, mortgage rate, years you'll stay, appreciation, rent growth, property tax, maintenance, insurance, buy and sell costs, and an investment return for the renter's cash. Any calculator that hides these is giving you an opinion, not a calculation.
Which option pays the most in the our default assumptions and their sources table?
Home price, at $420,000 (≈2025 US median existing-home price (NAR)). That row represents the strongest case in this dataset, so use it as an upper bound rather than an expectation.
What is a realistic low-end figure?
Maintenance at 1%/yr (Common planning rule of thumb). Plan your costs so the low end still works, then treat anything above it as upside.
Why do the numbers vary so much?
The spread between the highest and lowest row is about 420000×. Financing terms and true operating expense ratio explain most of that gap — see the drivers section above for the full list.
Where do these numbers come from?
Excluded deliberately: mortgage interest deduction (most filers take the standard deduction), capital-gains tax (the $250k/$500k exclusion covers most sellers) and PMI (lender- and credit-specific).
How can I estimate my own number instead of using a benchmark?
Use the Rent vs Buy Net Worth Calculator on RevenueLab — it takes your own inputs and returns a figure specific to your setup, which is always more accurate than a published range.
Model your own numbers
- Rent vs Buy Net Worth Calculator
- Rent vs Buy Break-Even Calculator
- Price-to-Rent Ratio Calculator
- Down Payment Opportunity Cost Calculator
Related reading
More answers in this category
- What is a good cap rate for rental property?
- How much profit should you make on a rental property?
- How much does an Airbnb make per month?
- How much money do you need to buy a rental property?
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Last updated 2026-10-01.