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Rent vs Buy Calculator
One of the biggest financial decisions you'll ever make. This tool models your net worth over 30 years to show you exactly when buying a home starts to beat renting and investing the difference.
How We Compare Buying vs Renting
The Buying Scenario
- Equity Building: Each mortgage payment includes principal paydown, increasing your stake in the asset.
- Appreciation: Real estate historically grows at 3-5% annually, compounding on the full value of the home.
- Unrecoverable Costs: We factor in Property Tax, Insurance, Maintenance (1% rule), and Closing Costs.
The Renting Scenario
- Opportunity Cost: Instead of a down payment, you invest that cash in the stock market (S&P 500 historically ~7-10%).
- Invest the Difference: If renting is cheaper than the total monthly cost of a home, we automatically invest the savings every month.
- Flexibility: No maintenance costs or selling fees, but rent increases typically 3% per year.
The Break-Even Point
In the early years, renting is almost always "cheaper" because of high front-end closing costs and mortgage interest. However, between Year 4 and Year 10, the "Equity Curve" of a home usually crosses the "Investment Curve" of a renter. This is your break-even year. If you plan to stay in a home for less than five years, renting is often safer.