Rent vs Buy Calculator
Compare the long-term financial impact of renting versus buying
Modeled outcome after 10 years
Renting has modeled higher net worth under these assumptions
by $61,161 in modeled net worthRenting
Total Paid $278,133
Investment Value $295,190
Net Worth $295,190
Buying
Total Paid $449,245
Home Equity $266,283
Investment Value $0
Net Worth $234,029
Monthly Rent (Current) $2,025
Monthly Buy Cost $2,873
Home Value in 10 yrs $537,567
Break-Even Year Beyond 10 years
Year-by-Year Comparison
| Year | Rent Cost | Buy Cost | Home Equity | Renter Investment | Buyer Investment |
|---|---|---|---|---|---|
| 1 | $24,300 | $34,752 | $95,577 | $104,796 | $0 |
| 2 | $25,020 | $35,066 | $111,753 | $122,345 | $0 |
| 3 | $25,762 | $35,390 | $128,556 | $140,686 | $0 |
| 4 | $26,525 | $35,723 | $146,013 | $159,863 | $0 |
| 5 | $27,312 | $36,067 | $164,155 | $179,921 | $0 |
| 6 | $28,123 | $36,421 | $183,012 | $200,906 | $0 |
| 7 | $28,957 | $36,785 | $202,618 | $222,870 | $0 |
| 8 | $29,817 | $37,161 | $223,007 | $245,867 | $0 |
| 9 | $30,702 | $37,547 | $244,216 | $269,953 | $0 |
| 10 | $31,615 | $37,946 | $266,283 | $295,190 | $0 |
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.