Rent vs Buy Calculator
Compare the long-term financial impact of renting versus buying
Recommendation after 10 years
Buying is Better
by $76,657 in net worthRenting
Total Paid $278,133
Investment Value $157,372
Net Worth $157,372
Buying
Total Paid $359,646
Home Equity $266,283
Net Worth $234,029
Monthly Rent (Current) $2,025
Monthly Buy Cost $2,873
Home Value in 10 yrs $537,567
Break-Even Year Year 3
Year-by-Year Comparison
| Year | Rent Cost | Buy Cost | Home Equity | Investment |
|---|---|---|---|---|
| 1 | $24,300 | $34,471 | $95,577 | $85,600 |
| 2 | $25,020 | $34,777 | $111,753 | $91,592 |
| 3 | $25,762 | $35,093 | $128,556 | $98,003 |
| 4 | $26,525 | $35,417 | $146,013 | $104,864 |
| 5 | $27,312 | $35,752 | $164,155 | $112,204 |
| 6 | $28,123 | $36,096 | $183,012 | $120,058 |
| 7 | $28,957 | $36,451 | $202,618 | $128,463 |
| 8 | $29,817 | $36,816 | $223,007 | $137,455 |
| 9 | $30,702 | $37,192 | $244,216 | $147,077 |
| 10 | $31,615 | $37,580 | $266,283 | $157,372 |
How the Rent vs Buy Calculator Works
The decision to buy a home is both emotional and financial. This calculator strips away the emotion to look at the math.
The Year-by-Year Simulation
We run a detailed simulation over your chosen time horizon, accounting for the growth of your investments if you rent versus the growth of your equity if you buy.
- Rent Scenario: Assumes you invest your down payment in the market.
- Buy Scenario: Tracks your home's appreciation and loan payoff.
- Selling Costs: We subtract 6% from your buying net worth to account for future agent fees.
Ownership Costs vs. Rent Inflation
Buying a home locks in your monthly principal and interest, but taxes, insurance, and maintenance will all rise over time alongside inflation.
- Maintenance: A common rule of thumb is to budget 1% of the home's value annually.
- Rent Appreciation: Most landlords increase rent by 3-5% every year.
- Tax Benefits: While complex, mortgage interest is often tax-deductible (not included in this simplified model).
The Break-Even Year
Buying usually wins in the long run because of equity and appreciation, but the high upfront costs (down payment, closing costs) make renting better in the short term.
- The 'Break-Even Year' is when the buyer's net worth finally overtakes the renter's.
- Net Worth (Buy) = Home Value - Loan Balance - Selling Costs.
- Net Worth (Rent) = Initial Investment + Contributions + Growth.