Rent vs. Buy Calculator: Which Pays Off More in 2026?
Rent and invest in ETFs, or buy and build wealth in property? Our calculator compares both scenarios over up to 40 years and shows you the break-even point at which buying pays off. With correct ETF taxation, federal-state-accurate closing costs and transparent, research-based default values.
Last updated: February 2026
Buying
Renting
Investment & time horizon
≈ 4.89 % net (after capital gains tax + solidarity surcharge, with partial exemption)
Enter a purchase price and net rent to compare renting and buying.
Rent or Buy: The Most Important Financial Decision
Renting versus buying is probably the biggest financial decision of your life. It involves hundreds of thousands of euros, decades of commitment and a choice that massively shapes your wealth. Yet this decision is often made emotionally: on gut feeling, family tradition or the pressure of rising rents.
Our calculator replaces emotion with data. It uses the method of a final-wealth comparison (Endvermögensvergleich): what do you end up with after 10, 20 or 30 years, as a buyer or as a renter who invests the equity amount instead? Both scenarios start with exactly the same money, but the path is fundamentally different.
Spoiler: there is no one-size-fits-all answer. Whether buying or renting is better depends on your individual situation: purchase price, rent level, interest rates, investment horizon and value appreciation. You can set exactly these variables above and compare them live.
The goal: a well-founded decision that you won't regret in 20 years, whether you choose to rent or to buy.
How the Comparison Works: Buyer vs. Renter
The calculator compares two scenarios with identical starting capital. That matters, because only then is the comparison fair.
Buyer scenario: you use your equity as a down payment, take out a loan and pay interest + principal each month. On top of that come the closing costs (Kaufnebenkosten, 8.5–15%), ongoing maintenance and property tax (Grundsteuer). After the loan term the property is yours, but you have tied up capital for decades.
Renter scenario: you invest your equity plus the saved closing costs immediately in a broadly diversified ETF portfolio. Each month you additionally invest the difference between your rent and the hypothetical loan payment. The portfolio grows through compound interest.
The principle: both sides start with the same money and the same monthly burden. In the end, the calculator compares net wealth: property value minus remaining debt for the buyer vs. portfolio value minus capital gains tax for the renter.
Break-even: When Does Buying Pay Off?
The break-even point is the moment from which the buyer has higher net wealth than the renter. Before that, renting would have been the better choice; afterwards, buying becomes increasingly worthwhile.
Typical break-even periods are between 10 and 18 years. That means: anyone who wants to live in the property for less than 10 years almost always does better by renting. Over a horizon of 20+ years, buying often becomes more attractive, but not automatically.
The three biggest levers on the break-even:
- •Price-to-rent ratio (KMV): the more expensive the purchase relative to the rent, the longer the break-even takes.
- •Interest rate level: higher interest rates make buying more expensive and push the break-even further out.
- •Value appreciation of the property: the more strongly the value rises, the sooner buying pays off.
In the calculator above you can see the break-even point live in the chart, exactly where the two wealth curves cross.
Price-to-rent Ratio: The Most Important Metric
The price-to-rent ratio (Kaufpreis-Miete-Verhältnis, KMV) indicates how many annual net rents you would have to pay for the purchase price. Formula: purchase price ÷ annual net rent. A KMV of 25 means: you pay 25 annual rents for the property.
The Germany-wide average is currently around 24–26×. In München or Hamburg, values above 30 are common; in rural regions sometimes below 15. The metric shows at a glance whether buying in your region is relatively cheap or expensive.
| KMV | Rating | Interpretation |
|---|---|---|
| ≤ 20 | Favourable | Buying often pays off, short break-even |
| 20–25 | Neutral | Buying can pay off, individual check needed |
| 25–30 | Expensive | Buying only pays off with a long holding period |
| > 30 | Very expensive | Renting is often the better choice |
The KMV is a first indicator. The final-wealth comparison in the calculator above additionally takes interest, principal repayment, value appreciation and ETF returns into account.
Hidden Costs of Buying: Don't Forget Opportunity Costs
The purchase price is only the tip of the iceberg. Anyone who does the maths honestly has to account for the actual total costs, and those are systematically underestimated.
Closing costs (Kaufnebenkosten, 8.5–15%): property transfer tax (Grunderwerbsteuer), notary (Notar), land registry and, where applicable, the agent. On a purchase price of 400,000 € that is 34,000 to 60,000 €. This money is gone immediately and creates no asset value. Our closing costs calculator shows you the exact amount.
Opportunity cost of your equity: your equity (e.g. 80,000 €) is tied up in the property after the purchase and no longer works in the capital market. At a 7% ETF return, that would be around 530,000 € of foregone growth over 30 years. This item is the one most often forgotten.
Maintenance reserve: you should plan for roughly 1.0–1.5% of the property value per year. On 400,000 € that is 4,000–6,000 € annually for the roof, heating, windows and unforeseen repairs.
Property tax (Grundsteuer): depending on the municipality and plot, 500–2,000 € per year. Due to the 2025 property tax reform, the amounts can shift significantly by region.
Immobility: a property ties you to one location. Changing jobs, a growing family or downsizing are associated with high transaction costs (another 8–12% when selling and buying again).
Concentration risk: your entire wealth sits in a single asset, in a single location. If the local property market falls, it hits you in full, unlike with a broadly diversified ETF portfolio.
Current Interest Rates and Market Situation 2026
After the rate turnaround in 2022, mortgage rates have settled at a significantly higher level than in the zero-interest phase. The ECB has cut its key rates slightly since the end of 2024, but the days of 1% mortgage rates are over.
| Fixed-rate period | Guide interest rate | Payment on 300,000 €* |
|---|---|---|
| 5 years | ~3.2% | 1,300 € |
| 10 years | ~3.5% | 1,375 € |
| 15 years | ~3.8% | 1,450 € |
| 20 years | ~4.0% | 1,500 € |
*At 2% initial repayment, as of February 2026. Individual terms depend on creditworthiness, equity and the property.
What does that mean in practice? Half a percentage point more interest costs you around 125 € per month on a 300,000 € loan, i.e. roughly 15,000 € extra over 10 years. The calculator above takes this into account automatically for your individual comparison.
Value Appreciation of Property: Myth and Reality
"Property always rises in value": this sentence is one of the most persistent myths in the financial world. The data say otherwise.
According to studies by the Bank for International Settlements (BIS) and analyses by Gerd Kommer, the real value appreciation (after deducting inflation) of residential property in Germany over long periods was only around 0.1% per year. The 2010–2021 property boom was a historical exception, driven by low interest rates and catch-up effects.
The 2022–2025 correction showed that property prices can also fall, in some regions by 10–20% from their peak. For the future, a nominal value appreciation of around 2% per year (i.e. roughly an inflation offset) is a realistic guide value.
In the calculator you can set the value appreciation individually. We recommend a conservative value (1–2% nominal) and an optimistic one (3–4%) as a sensitivity analysis.
Rent and Invest in ETFs: The Alternative
The alternative to buying property is not "renting money", but renting plus systematic investing. Anyone who consistently invests the difference between the loan payment and the rent in a globally diversified ETF also builds wealth.
The MSCI World Index has achieved a nominal return of 8–9.7% per year over the last 50 years. After deducting the German capital gains tax (Abgeltungssteuer, 26.375% incl. solidarity surcharge) and taking the 30% partial exemption for equity funds into account, around 5–6% after taxes remains in real terms.
Advantages of the ETF strategy: maximum diversification across thousands of companies worldwide, high liquidity (shares can be sold at any time), low costs (TER below 0.2%), no concentration risk and no maintenance costs. You also benefit from the compounding effect on the entire invested capital.
Important: the calculator accounts for the capital gains tax correctly. The renter's final wealth is shown after taxes, because only then is the comparison with the debt-free property owner fair.
Frequently asked questions about renting vs. buying
Buying is mainly worthwhile if you want to hold the property for at least 10–15 years, the price-to-rent ratio is below 25 and interest rates are moderate. The longer you hold, the more you benefit from principal repayment (= wealth building) and value appreciation. With a short holding period (< 7 years), the closing costs (Kaufnebenkosten), which arise immediately at purchase, usually outweigh the benefit.
It depends on many factors: purchase price, interest rate, rent, value appreciation and the return of an alternative investment. Use our calculator to run your individual case. As a rough rule of thumb: if the price-to-rent ratio is below 20 and you stay for more than 15 years, buying is usually cheaper.
At least 20–30% of the purchase price plus the full closing costs (8.5–15%) are recommended. Example: at a purchase price of 350,000 € and 10.5% closing costs (36,750 €), you should bring around 107,000–142,000 € of equity. Less is possible, but leads to a higher monthly payment and often to worse interest terms.
The price-to-rent ratio (Kaufpreis-Miete-Verhältnis, also called the multiplier or purchase factor) is calculated as the purchase price divided by the annual net rent. A value of 25 means: you pay 25 times the annual rent. Values below 20 are considered favourable, above 25 expensive. In large German cities the factor is currently around 25–35.
On top of the loan payment there are: a maintenance reserve (~1% of the purchase price/year, per the Petersian formula), property tax (Grundsteuer, 300–800 €/year depending on the municipality), for condominiums a service charge (Hausgeld, 3–4.50 €/m²/month), building insurance and, where applicable, reserves for major renovations. These costs belong in every rent-vs-buy comparison.
Higher interest rates make buying more expensive, but purchase prices also adjust. What matters is not the interest rate alone, but the overall package: purchase price, interest rate, available equity and the comparable rent. At 3.5% interest, buying can still pay off if the purchase price is fair relative to the rent (factor < 25) and you have sufficient equity.
Opportunity costs describe the foregone gain that your equity would have earned in an alternative investment (e.g. an ETF). 100,000 € of equity at a 6% return ≈ 6,000 € of foregone gains per year. Plus the closing costs (e.g. 36,750 €), which the renter can also invest. These "hidden costs" make buying more expensive than the pure loan payment suggests.
As a rule of thumb: at least 10–15 years. In the first few years, the closing costs (8.5–15%) eat up the advantage. This money is gone immediately at purchase and first has to be "earned back" through value appreciation and principal repayment. Use our calculator to determine the exact break-even for your case.
It can pay off, but it depends on your discipline. The MSCI World has historically achieved 8–9.7% per year (after tax ~5%). If you consistently save and invest the same amount that a buyer spends on the loan + closing costs, you can build comparable or higher wealth over the long term. The decisive advantage of buying is the "forced saving effect": the loan payment has to be paid, whereas the ETF savings rate requires discipline.
Value appreciation is one of the most sensitive parameters. Even ±1% annual appreciation shifts the break-even by several years. Over the long term, the real value appreciation in Germany was only around 0.1%/year (Gerd Kommer / BIS data). In nominal terms (with inflation), around 2%/year is realistic. Anyone counting on 4–5% is relying on the exceptional 2010–2021 phase and could be disappointed.
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