Rent vs Buy Calculator
Renting is not throwing money away, and buying is not automatic wealth. This calculator simulates both paths side by side — appreciation, maintenance, rent inflation, and returns on invested savings — to show which builds more net worth over your horizon.
Your results
Charts & visualization
Wealth advantage over time
Each line shows that path’s net advantage over its starting capital. Renting often leads early; buying tends to close the gap as equity accumulates and rents rise.
Every chart’s underlying numbers are available as text — use the “view as table” control under each chart.
How it works
Both scenarios start with identical cash (down payment plus buying closing costs) and identical monthly budgets:
- The buyer puts the cash into the house and pays principal, interest, tax, insurance, HOA, and maintenance each month. Wealth grows through principal paydown and appreciation; at sale, selling costs are deducted.
- The renter invests that same upfront cash in a portfolio earning your assumed return, pays rising rent, and invests whatever the buyer spends beyond rent (or withdraws when rent is cheaper).
The chart plots each side’s net advantage over time, and the summary identifies the crossover year — the point where buying pulls ahead, if it does. Short horizons favor renting almost everywhere; long horizons usually favor buying, but high prices, low rent growth, or strong market returns can flip the answer.
Formula used
r— assumed investment return, compounded monthlyMonthly difference— buyer’s total ownership cost − current rentCrossover— first year buyer wealth ≥ renter wealth
Example calculation
Buying a $450,000 home with $90,000 down costs roughly $2,738 monthly before maintenance, while a comparable rental starts at $2,200. Over ten years — including about $13,500 in buying closing costs and 8% selling costs at exit — renting wins here by roughly $67,072: this rent is low relative to the purchase price, and the freed-up down payment compounds at 5% instead. Raise assumed appreciation toward 5%–6%, increase rent growth, or extend the horizon and the lines cross — the break-even year output shows exactly where.
Assumptions & limitations
- Fixed-rate mortgage held for the full horizon; no early payoff modeled.
- Appreciation and investment returns are constant-rate assumptions, not predictions.
- Maintenance scales with home value; major renovations are not modeled.
- Property taxes and insurance are held flat; real escrows drift upward over time.
- Tax benefits (mortgage interest deduction, capital-gains exclusion) are excluded for simplicity.
- Both households are assumed to have identical budgets — lifestyle upgrades are not compared.
Results are planning estimates based on your inputs and the stated assumptions — not financial advice or a loan offer. Verify important figures with your lender or advisor.
Frequently asked questions
Is renting really throwing money away?
No. Rent buys housing with none of the ownership costs — maintenance, insurance, property tax, transaction fees — and it frees your down payment to earn returns elsewhere. Buying trades those flexibility advantages for forced savings and leveraged exposure to home prices.
How many years do I need to stay for buying to win?
Commonly five to seven years, driven by how large closing and selling costs are relative to local price growth and rent levels. The crossover year output above computes it for your exact numbers.
What return should I assume for money invested while renting?
A balanced index portfolio has historically returned around 5%–7% nominal per year over long periods, with significant ups and downs along the way. Use a conservative figure; the calculator defaults to 5%.
Why does the chart start below zero?
Both paths begin by deploying the down payment plus closing costs, so their “advantage” lines start at zero and diverge as equity or portfolio growth outpaces the sunk costs of each strategy.