Buy vs Rent Calculator
Compare the long-term financial outcome of buying a home versus renting and investing the savings.
Your Situation
If You Buy
If You Rent
Buying
Renting
Outcome
Net Worth Over Time
Monthly Cost Over Time
Advantage Over Time
Cumulative Spending
Year-by-Year Details
| Year | Home Value | Home Equity | Buy Investments | Buy Net Worth | Rent Investments | Rent Net Worth | Advantage |
|---|
How It Works
The Buy vs Rent Calculator simulates the long-term financial outcome of two parallel scenarios — buying a home with a mortgage versus renting and investing the saved capital — over a horizon you choose. Enter the home price, mortgage rate, down payment, monthly rent, expected investment return rate, and time horizon, and the tool runs both scenarios month by month: in the buy scenario it tracks principal paydown, equity build-up, mortgage interest, property tax and maintenance estimates; in the rent scenario it invests the down payment plus the monthly difference between owning and renting at the chosen return rate, simulating the opportunity cost of locking capital into a house. The summary shows which scenario comes out ahead in net wealth at the end of the horizon, and an interactive chart lets you see the crossover year — the break-even point at which buying overtakes renting. The result depends sensitively on the inputs, especially the gap between mortgage rate and investment return; small changes flip the outcome, which is exactly what makes the comparison illuminating.
Worked Example
Compare a $400,000 purchase with 20% down against renting the same home for $1,800 a month. The calculator simulates both paths month by month — mortgage interest, property tax, maintenance and appreciation on one side; rent growth plus investing the down payment and any monthly savings on the other. The net-worth chart shows both curves and marks the break-even year with a vertical line: before it, the renter who invests is ahead; after it, the owner is. Move home appreciation from 3% to 4% and watch the break-even point slide years earlier.
Use Cases
- Deciding whether to buy or keep renting in your current city
- Quantifying the break-even point where buying becomes cheaper than renting
- Comparing the financial outcome at different property appreciation rates
- Evaluating a relocation decision where housing costs differ significantly
Frequently Asked Questions
- Why does renting sometimes win even with rising home prices?
- Because the down payment, invested at typical equity returns, often beats the mortgage paydown rate — especially in high-rate environments. Property appreciation has to outpace investment returns by a meaningful margin to flip the result.
- What ownership costs are included?
- Mortgage principal and interest, plus rough estimates for property tax and maintenance as a percentage of home value. Adjust those inputs to match your local market.
- How do I model HOA or condo fees?
- Add them to the maintenance percentage or treat the rent number as inclusive of those fees on the buy side.
- What about tax deductions on mortgage interest?
- The tool does not model tax effects directly; for many filers the standard deduction has eliminated the mortgage-interest benefit anyway. Reduce the effective rate slightly if you itemise.
- Are my numbers sent anywhere?
- No. The two-scenario simulation runs in your browser only.