How this rent vs buy calculator works
This calculator compares two paths over the same time horizon: renting and investing, or buying and building home equity. It models mortgage amortization, property taxes, insurance, maintenance, HOA dues, home appreciation, rent increases, and a shared investment return assumption.
The key output is projected net worth difference at your move-out date. If buying leads to a higher net worth, the calculator will show buying as financially ahead. If renting leads to a higher net worth, it will show renting ahead.
What is included in the math
Buying scenario
- Down payment and purchase closing costs paid upfront
- Monthly mortgage payment based on your rate and term
- Monthly ownership costs: property tax, maintenance, insurance, HOA
- Home value growth based on appreciation assumption
- Sale proceeds net of selling costs and remaining loan balance
Renting scenario
- Monthly rent plus renter insurance
- Rent growth over time
- Investing the upfront cash not used for a home purchase
- Investing monthly cost differences between renting and buying
How to use this calculator well
Small input changes can flip the result, especially your stay length, mortgage rate, rent growth, and investment return. Run at least three cases: conservative, base, and optimistic. Focus less on one “perfect answer” and more on the range of outcomes.
Good baseline assumptions to test
- Home appreciation: 2% to 4%
- Rent growth: 2% to 5%
- Investment return: 5% to 8%
- Maintenance: around 1% of home value per year
When buying usually wins
Buying tends to perform better when you stay longer, keep transaction costs low, lock in a reasonable mortgage rate, and purchase a home you can comfortably afford. Time allows equity growth and appreciation to offset one-time buying and selling costs.
When renting can be smarter
Renting can be better if you may move soon, if local home prices are stretched relative to rents, or if you can reliably invest the monthly savings instead of increasing lifestyle spending. Flexibility has real value, especially in uncertain job markets.
Important caveats
- This tool does not include tax deductions or local tax law complexity.
- Unexpected repairs can materially increase ownership costs.
- Market returns are volatile and not guaranteed.
- Personal factors like stability, space, schools, and stress also matter.
Use this as a decision framework, not a crystal ball. The best housing choice is the one that supports both your finances and your life plans.