Rent vs Buy Calculator
Enter your rent and home purchase details to see which option builds more wealth.
Renting
Buying
Assumptions
Renting wins by
$20,690
After 10 years · Never breaks even in this period
Buyer Net Worth
$228,653
Renter Net Worth
$249,343
Cost Summary
Renting
Buying
Year-by-Year Net Worth Comparison
| Year | Rent Cost | Buy Cost | Renter NW | Buyer NW |
|---|---|---|---|---|
| 1 | $24,000 | $34,871 | $105,201 | $66,737 |
| 2 | $24,720 | $35,135 | $118,894 | $82,048 |
| 3 | $25,462 | $35,407 | $133,104 | $97,959 |
| 4 | $26,225 | $35,687 | $147,855 | $114,499 |
| 5 | $27,012 | $35,976 | $163,173 | $131,695 |
| 6 | $27,823 | $36,273 | $179,088 | $149,578 |
| 7 | $28,657 | $36,579 | $195,629 | $168,181 |
| 8 | $29,517 | $36,894 | $212,829 | $187,537 |
| 9 | $30,402 | $37,219 | $230,722 | $207,682 |
| 10 | $31,315 | $37,553 | $249,343 | $228,653 |
Down Payment Opportunity Cost
Your $80,000 down payment could grow to $157,372 if invested at 7% over 10 years — that's $77,372 in potential returns.
Disclaimer
- This is a simplified comparison. Actual costs vary by location and individual circumstances.
- Home appreciation and investment returns are assumptions, not guarantees.
- Does not include all tax implications (e.g., capital gains exclusion on primary residence).
Renting vs Buying — It's Not as Simple as "Rent Is Throwing Money Away"
The rent-vs-buy decision is one of the biggest financial choices you'll make. The common wisdom that "renting is throwing money away" ignores several important factors: the opportunity cost of a down payment, property taxes, maintenance, insurance, closing costs, and the flexibility premium of renting.
The Hidden Costs of Homeownership
- Property taxes — 0.5% to 2.5% of home value annually
- Home insurance — $1,500-$3,000+ per year
- Maintenance & repairs — budget 1-2% of home value annually
- Closing costs — 2-5% to buy, 6-8% to sell
- PMI — 0.3-1.2% if down payment is under 20%
- HOA fees — $200-$500+/month in some areas
Rent vs Buy Cost Comparison Example
| Factor | Renting | Buying ($350K home) |
|---|---|---|
| Monthly housing cost | $1,800 rent | ~$2,400 (PITI + PMI) |
| Upfront cash needed | ~$3,600 (deposit) | ~$45,000 (down + closing) |
| Annual maintenance | $0 | ~$3,500-$7,000 |
| Tax benefit | None | Varies (if itemizing) |
| Equity after 10 yrs | $0 | ~$100,000-$180,000 |
The 5-Year Rule
A common guideline: if you plan to stay less than 5 years, renting is often cheaper because transaction costs (closing costs on both ends) eat into any equity you build. The longer you stay, the more buying tends to win — but it's not guaranteed, especially in slow-appreciation or high-cost markets.
The Opportunity Cost of a Down Payment
A $80,000 down payment invested at 7% would grow to roughly $157,000 over 10 years. This is "money you gave up" by locking it in home equity. The calculator above factors this in — the renter's investment portfolio grows while the buyer's equity builds.
When Does Buying Usually Win?
- You plan to stay 7+ years
- Rent is high relative to home prices (low price-to-rent ratio)
- Mortgage rates are low
- Home appreciation is strong in your area
- You can put 20% down (avoiding PMI)
When Does Renting Usually Win?
- You may move within 3-5 years
- Home prices are very high (San Francisco, NYC, Boston)
- Mortgage rates are high
- You can invest the difference at good returns
- You value flexibility and low maintenance
Frequently Asked Questions
What assumptions matter most?
Home appreciation rate and investment return rate have the biggest impact. Small changes in these assumptions can flip the result. Try adjusting them in the calculator to see sensitivity.
Does this include tax benefits of owning?
Yes, the calculator estimates the mortgage interest deduction benefit. However, since the 2017 tax reform, most homeowners take the standard deduction ($31,400 for married couples in 2026), making the mortgage interest deduction less valuable than before.
What about the emotional value of ownership?
This calculator focuses on financials. Stability, control over your space, and the pride of ownership have real value that can't be captured in a spreadsheet. Factor those in alongside the numbers.
Ready to see what you can afford? Try our Home Affordability Calculator or Mortgage Calculator.