Buy vs. Rent Calculator

The honest comparison — true cost of ownership vs. renting and investing the difference, including opportunity cost of the down payment.

Home purchase

True cost of ownershipMortgage P+I is just the starting point. Property tax, insurance, maintenance (historically 1-2% of home value per year), HOA fees, and PMI (if down payment under 20%) are all real ongoing costs.

Opportunity cost of down paymentThe down payment could instead be invested. This is the most frequently ignored cost of homeownership. At 7% returns, an $80K down payment grows to $157K in 10 years — that growth is a real cost of buying.

Closing costs & selling costsPurchase closing costs run 2-4%. Agent commissions and closing costs on sale typically run 6-8% of the sale price. These transaction costs mean buying almost always loses in the short run.

Home purchase price $450,000

Down payment 20%

Mortgage rate 6.75%

Mortgage term 30 yrs

Property tax rate (annual) 1.20%

Annual maintenance (% of value) 1.00%

Homeowner's insurance (annual) $1,800

HOA fees (monthly) $0/mo

Purchase closing costs 3.0%

Home appreciation rate (annual) 3.5%

Renting

Rent + invest scenarioThe honest comparison. The renter invests the down payment and closing costs from day one, plus any monthly surplus if ownership costs exceed rent. This is net worth vs net worth, not payment vs payment.

Annual rent increaseHistorical average is around 3%. Rising rent erodes the renting advantage over time — a fixed mortgage payment becomes relatively cheaper as rent climbs.

Monthly rent $2,200/mo

Annual rent increase 3.0%

Renter's insurance (annual) $200

Assumptions

Mortgage interest deductionReduces your effective ownership cost by your marginal tax rate times annual interest paid. Note: the 2017 tax law reduced the value of this deduction for many homeowners by raising the standard deduction threshold.

Years to modelThe most important variable. Buying almost always wins over 20-30 years due to appreciation and fixed payments. Renting often wins over 3-5 years due to transaction costs. The break-even is typically 5-8 years.

Home appreciation3-4% reflects the US long-run historical average per Case-Shiller. Local markets vary significantly. Appreciation is not guaranteed and can be negative over short periods.

Investment return (renter invests surplus) 7.0%

Marginal tax rate (mortgage deduction) 24%

Years to model 10 yrs

Selling costs at exit (agent + closing) 6.0%

Buy vs. Rent Calculator — Results Summary

Recommended over 10 years

Monthly cost breakdown

Mortgage P+I-

Property tax-

Insurance + maintenance + HOA-

PMI (if applicable)-

Mortgage interest tax saving-

True monthly cost of owning-

Monthly rent (year 1)-

Net worth if you buy

equity minus selling costs

Net worth if you rent

portfolio value

Net worth difference

buy minus rent

Total interest paid

over mortgage life

Home value at exit

after appreciation

Opp. cost of down payment

if invested instead

What this means

What moves the needle

How to read thisEach bar shows how the net worth gap (buy minus rent) shifts when one assumption moves up or down while everything else stays fixed. Longer bars mean the result is more sensitive to that input. A bar that crosses the center line means changing that assumption can flip the verdict.

Favors rentingFavors buying

Chart view

Net worth if buying

Net worth if renting + investing

This calculator is for educational and informational purposes only. Results are estimates based on the inputs you provide and should not be taken as professional advice. The mortgage interest deduction is simplified — actual deductibility depends on itemizing, SALT caps, and other factors. Home appreciation, investment returns, and rent increases are assumptions, not guarantees. Always consult a qualified financial advisor and real estate professional for decisions involving investments, taxes, or financial planning.

Buy vs. Rent Calculator

Buy vs. Rent Calculator — Results Summary

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