Rent vs Buy Calculator
Renting isn't throwing money away, and buying isn't always the smart move. Compare the total financial picture — down payment, mortgage, appreciation, and what your money could earn invested elsewhere — to see which path builds more wealth for you.
*Estimates only, not financial advice. Excludes closing costs, PMI, and HOA fees.
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Mortgage Loan Calculator🏠 Renting vs Owning, By the Numbers
The math behind one of the biggest financial decisions most people ever make.
How it Works
Simulates both paths month by month: buying builds home equity as you pay down principal and the home appreciates; renting keeps your down payment and any monthly savings invested and compounding instead.
The Formula
Buy Net Worth = Home Value − Remaining Loan Balance. Rent Net Worth = Invested Down Payment + Invested Monthly Savings, compounded at your chosen return rate.
Pro Tip
The shorter you plan to stay in a home, the more renting tends to win, because upfront transaction costs (closing costs, realtor fees) eat into early equity gains. Buying usually pays off after 5-7+ years in the same home.
Frequently Asked Questions
Is it ever better to rent than to buy? +
Yes. If you plan to move within a few years, if local home prices are far above rents (a high price-to-rent ratio), or if you'd rather keep your down payment invested in the market, renting can build more net worth than buying. The break-even year depends heavily on appreciation, mortgage rate, and how you'd invest the money you'd otherwise put into a down payment.
What costs does this calculator include on the buying side? +
It includes the down payment, monthly principal & interest on the mortgage, and an estimated 1.5% of home value per year for property taxes, insurance, and maintenance. It does not include closing costs, PMI, or HOA fees, which can add several thousand dollars and should be factored in separately.
What is the "opportunity cost" of a down payment? +
If you rent instead of buy, the money you would have used for a down payment can be invested in the stock market or another vehicle instead. This calculator assumes that money grows at your chosen investment return rate, and compares that growing balance to the equity you'd build in a home.
What is a break-even year? +
The break-even year is the point at which your net worth from buying (home equity minus remaining loan) overtakes your net worth from renting and investing the difference. Before that year, renting has typically produced more wealth; after it, buying usually wins because equity and appreciation compound.
Does home appreciation always favor buying? +
Not necessarily. Historical US home price appreciation averages roughly 3-4% per year, similar to inflation, while stock market returns have historically averaged closer to 7-10% annually. Whether buying wins depends on your specific appreciation assumption relative to your investment return assumption, plus how long you stay in the home.