Price-to-rent ratio calculator

The price-to-rent ratio is a home’s purchase price divided by a year of comparable rent. A $420,000 house that rents for $2,100 a month ($25,200 a year) scores 16.7. The classic bands — under 15 favors buying, over 20 favors renting — are a useful first screen, but they quietly assume a mortgage rate: with 30-year rates in the mid-6s (Freddie Mac’s weekly average, as of August 2026), our model puts the buy-favorable line closer to 14.

What does the price-to-rent ratio measure?

It divides what a home costs to buy by what it costs to rent for a year: ratio = price ÷ (monthly rent × 12). One number, comparable across cities and decades. A high ratio means ownership is expensive relative to renting; a low ratio means the rent is doing the overpaying.

The comparison only works if the rental is genuinely comparable — same neighborhood, size, and condition, not “a $420,000 house versus a one-bedroom apartment.” You can run it on a specific house you’re considering, or on metro medians to size up a whole market. The calculator above handles both.

Where did the “under 15 buy, over 20 rent” bands come from?

The bands trace to mid-2000s housing-bubble analysis. The long-run US average ratio had sat in the mid-teens, so 15 marked normal-to-cheap and 20 marked froth: the New York Times popularized a “rent ratio” metric with readings near 20 as a warning sign, and Trulia’s early-2010s rent-vs-buy index hard-coded similar cutoffs. The national average spiked toward the mid-20s at the 2006 peak, fell back to roughly 15 by 2012, and has drifted up since (all figures approximate).

Note what the bands actually are: historical pattern-matching, not a cash-flow model. They summarize when US buyers tended to do well under the financing conditions of those decades — which matters, as we’ll see below.

How do you find your metro’s price-to-rent ratio?

Measure it yourself in about thirty seconds — divide a home’s price (or your metro’s median list price) by twelve times the monthly rent of a genuinely comparable rental (or the median asking rent) from the same area and size, using any listing portal’s current figures. We don’t publish a per-metro ratio table here, because we couldn’t verify one the way we verify everything else on this site — third-party metro medians move monthly and carry methodology choices we can’t audit. The honest qualitative pattern: expensive coastal metros generally run far above the classic rent band, much of the Midwest and inland South sits below the buy band, and the national picture lands in between.

Our engine agrees with what the bands imply at the extremes. An expensive-metro scenario ($1.1M home, $3,800 rent — a ratio of about 24) has renting winning by roughly $561,000 over 15 years, even for a married couple itemizing deductions. An affordable-market scenario ($220,000 home, $1,600 rent — a ratio of about 11.5) flips decisively to buying over 10 years. Cheap markets where rent is high relative to price are where ownership pays.

Is the 0.5% rule the same thing?

Yes — it’s the same ratio turned upside down. Monthly rent as a percentage of price equals 1 ÷ (12 × ratio), so rent at 0.5% of the price per month is a ratio of 16.7, squarely inside the “could go either way” band. (Landlords’ old “1% rule” is a ratio of 8.3; almost no major 2026 metro clears it.)

Our default scenario is exactly this case: $2,100 rent on a $420,000 home is 0.50% a month. At a 6.5% mortgage with 20% down, 3% home appreciation, 2.5% rent growth, 7% investment returns, and a 10-year stay, renting and investing the difference wins by about $67,000. The owner’s true first-year cost is $3,067 a month ($2,124 principal and interest plus taxes, insurance, and maintenance) against roughly $2,115 all-in for the renter. At today’s rates, 0.5% a month is not automatically buy territory.

Mortgage rates move the buy-favorable threshold — a lot

The classic bands assume a financing environment. Our model’s tipping-point rents — the rent at which buying starts to beat renting in the default $420,000 scenario over 10 years — convert directly into threshold ratios, and they slide hard with rates: buying wins below a ratio of roughly 18.5 at a 4% mortgage, but only below about 14 at 6.5%.

Our model’s assumptions: 20% down, 3% appreciation, 2.5% rent growth, 7% investment return, 10-year stay, standard deduction. Buying wins when actual rent exceeds the tipping rent.

Read the 6% row: the classic “under 15” line is roughly calibrated for a 6% world. At 4%, the identical default scenario flips outright — buying wins by about $38,000, breaking even in year 6 — which is why a 2021 buyer and a 2026 buyer can look at the same ratio and rationally do opposite things. The mechanics are unpacked in when does buying beat renting and our 2026 rent-vs-buy outlook.

What the ratio can’t tell you

It’s one number, so it ignores everything else that decides the outcome: how long you’ll stay, your tax situation, what your down payment could earn elsewhere, and the spread between appreciation and rent growth. Treat it as a screen that tells you which markets deserve a full analysis — not as the analysis.

• Holding period. Even at 4% money, our default buyer doesn’t break even until year 6; selling costs swamp short stays.
• Taxes. Standard-versus-itemized status changes the math; our engine models the 2026 $40,400 SALT cap and $750,000 mortgage-interest cap — details on the methodology page. Outside the US, the calculator is currency-agnostic and every tax input can be zeroed.
• Opportunity cost, on both sides. Whichever side pays less each month should be investing the difference; most tools credit only the renter. For the shortcut version of this logic, see the 5% rule calculator.
• Your house isn’t the median. Metro-level ratios hide condition, HOA fees, and insurance differences that can move true costs by hundreds a month.
• Fragility. A ratio can’t show how close the call is. In our default 6.5% scenario, no single ±1-point assumption change flips the verdict; at 4%, a ±1-point move in appreciation or the rate does.

The price-to-rent ratio chart: who wins, by ratio and rate

One ratio does not have one verdict — it has a different one at every mortgage rate. Read down for your market's ratio, across for the rate you can actually get. Every cell is a full simulation of the same $420,000 home, with rent solved from the ratio.

Our model's defaults otherwise: 20% down, 3% appreciation, 2.5% rent growth, 7% investment return, 10-year stay, standard deduction. Rent is derived from the ratio against a fixed $420,000 price, so each row is a different market rather than a different house. Figures are net-worth gaps at the end of the stay, after selling costs and taxes on both sides.

Two things fall out of it. The buy-favorable line is not a constant: the classic "under 15" band only behaves like one near a 6% mortgage, and each point of rate moves it by one to two ratio points — more at cheap money than dear. And the columns are not symmetric — at high ratios renting wins by amounts no rate change rescues, while the cells that flip are clustered in a narrow band, which is exactly where a full simulation earns its keep over a rule of thumb.