The rulebook · Form RB-12
The Price-to-Rent Ratio Form RB-12
One division, thirty seconds: home price divided by annual rent. Below 15, buying usually pencils out. Above 20, renting usually wins. Between 15 and 20 is the gray zone — that’s where most of America lives, and where you run the full numbers instead of trusting the rule.
15Under 15: buying territory
A $300,000 home against $2,000 a month rent is a 12.5 ratio — the price is only twelve and a half years of rent. The mortgage payment alone is usually below the rent here, and the break-even year arrives early. This is the market where buying is the obvious call.
20Over 20: renting territory
An $800,000 home against $2,500 a month rent is a 26.7 ratio — you could rent for over 26 years before matching the price. The owning costs dwarf the rent, and renting stays ahead for decades. Expensive coastal markets live here; rent, invest the difference, and feel no guilt.
?15 to 20: the gray zone
A $450,000 home against $2,200 rent is 17.0 — and so is a $350,000 home against $1,800 rent (16.2), and a $650,000 home against $3,000 rent (18.1). The rule can’t decide here: how long you stay, your down payment, and the rate pick the winner. This is exactly what the full calculator is for.
- $300k home, $2,000 rent12.5 — buy
- $350k home, $1,800 rent16.2 — gray zone
- $450k home, $2,200 rent17.0 — gray zone
- $650k home, $3,000 rent18.1 — gray zone
- $800k home, $2,500 rent26.7 — rent
The ratio is the 30-second version of the break-even math — it ignores your down payment, rate, and horizon, which is exactly what the gray zone depends on.
Common questions Form RB-12
What is a good price-to-rent ratio?
Below 15 is buying territory, above 20 is renting territory, and 15 to 20 is the gray zone where your horizon and down payment decide. Most real decisions land in the gray zone — that’s the point of the rule: it tells you when you can skip the calculator and when you can’t.
How do you calculate the price-to-rent ratio?
Home price divided by annual rent. $450,000 divided by ($2,200 × 12) = 17.0. Use the rent for a comparable home, not a smaller apartment — comparing a house purchase to studio rent is the classic way to misuse the rule.
Is the 15/20 rule reliable?
As a screen, yes; as a verdict, no. It ignores the mortgage rate, your down payment, and how long you’ll stay — the three variables that decide the gray zone. In the gray zone, run the full math.
What ratio is your example home?
The worked examples on this site cluster in the gray zone on purpose: $450k/$2,200 = 17.0, $350k/$1,800 = 16.2, $650k/$3,000 = 18.1. Gray-zone decisions are where the calculator earns its keep.