Rent vs. Buy Calculator
See whether renting or buying leaves you wealthier. This calculator compares the full cost of owning a home — mortgage, taxes, insurance, maintenance, PMI, and the money tied up in your down payment — against renting and investing that money instead, then tracks each path’s net worth year by year.
The honest comparison is not monthly payment versus rent; it is net worth after you account for home appreciation, selling costs, and the opportunity cost of your down payment. The break-even year shows how long you need to stay for buying to overtake renting.
After 7 years
Renting is ahead by $19,218
in net worth, after selling costs and opportunity cost
- Net worth if you buy
- $173,101
- Net worth if you rent
- $192,318
- Home value in 7 yrs
- $491,950
- Home equity at sale
- $173,101
- Total rent paid
- $205,056
Renting stays ahead for the whole 7-year period. Buying tends to win only if you stay longer.
Net worth by year — buy vs. rent
| Year | If you buy | If you rent | Difference |
|---|---|---|---|
| 1 | $70,857 | $105,582 | −$34,726 |
| 2 | $86,291 | $119,418 | −$33,127 |
| 3 | $102,330 | $133,506 | −$31,176 |
| 4 | $119,001 | $147,843 | −$28,842 |
| 5 | $136,332 | $162,426 | −$26,094 |
| 6 | $154,354 | $177,253 | −$22,899 |
| 7 | $173,101 | $192,318 | −$19,218 |
Calculation Formulas
Buying builds wealth two ways: home equity (the sale price after ~6% selling costs and the remaining mortgage) plus any months the mortgage cost less than rent, which the buyer invests. Each month the home grows at your appreciation rate and the loan is amortized down.
Renting frees the cash a buyer would sink into a down payment and closing costs. The renter invests that lump sum, plus every month renting costs less than owning, all compounding at your expected investment return — the opportunity cost that makes the comparison fair.
Key Figures
| Figure | Value | Description |
|---|---|---|
| Buying closing costs | ≈ 3% of price | Loan, title, and settlement fees paid when you purchase. |
| Selling costs | ≈ 6% of price | Agent commission and closing fees paid when you sell. |
| PMI | 0.5% / yr under 20% equity | Private mortgage insurance on the loan balance until you reach 20% equity. |
Note: Results are estimates for planning purposes. Rates, fees, taxes, and insurance vary by lender and location — confirm exact figures with a licensed professional before making financial decisions.
Standards & Sources
Last verified: August 2026
- Invest-the-difference net-worth method
The fair way to compare renting and buying is to give both the same starting cash and the same investment return, then measure net worth at the end — the approach used by widely cited rent-vs-buy models. Whoever spends less in a given month invests the difference.
- Transaction costs matter
Buying and selling a home carries roughly 3% and 6% in one-time costs. Those costs are why buying usually needs several years to break even against renting — the break-even year in the table shows when equity finally overtakes an invested down payment.
- Results depend on your assumptions
Home appreciation, rent growth, and investment returns are estimates, not guarantees. The calculator makes every assumption an input so you can test optimistic and conservative scenarios rather than trust a single hidden guess.
How to Use This Calculator
- Enter the home price, down payment, interest rate, and loan term for the home you’d buy.
- Enter the monthly rent for a comparable place and how many years you expect to stay.
- Set your assumptions — home appreciation, rent growth, and the return you’d earn investing the down payment instead.
- Read who comes out ahead in net worth, and check the year-by-year table for the break-even point where buying overtakes renting.
Frequently Asked Questions
Is it better to rent or buy a house?
It depends mostly on how long you’ll stay. Buying carries large one-time costs (about 3% to buy and 6% to sell), so it usually takes several years for the equity you build to overtake renting and investing your down payment. This calculator finds that break-even year for your specific numbers.
Why does this compare net worth instead of monthly payment?
Comparing a mortgage payment to rent is misleading — it ignores your down payment, closing and selling costs, maintenance, home appreciation, and the return you could earn investing that money. Comparing net worth after several years captures all of it, which is the only fair way to answer the question.
What is the break-even point for buying vs. renting?
It’s the year your net worth as a buyer (home equity after selling costs, plus any invested savings) first exceeds your net worth as a renter (your invested down payment plus monthly savings). Stay past the break-even year and buying wins; sell before it and renting was the better financial move.
What assumptions matter most in a rent vs. buy decision?
The three biggest levers are home appreciation, rent growth, and the investment return you’d earn on the money instead. Small changes to any of them can flip the answer, which is why this calculator exposes all three as inputs rather than hiding them behind a fixed guess.
Does buying always build more wealth than renting?
No. If you move within a few years, or if rents are low relative to home prices and your investments perform well, renting and investing the difference can leave you wealthier. Buying wins most clearly when you stay long enough to spread the transaction costs and let equity and appreciation compound.
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