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Rent vs. Buy Calculator

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This compares the net worth impact of buying a home versus renting and investing the money you'd otherwise use as a down payment. It's a simplified model — see the notes below for what it leaves out — but it captures the core financial trade-off: home appreciation and equity versus market investment returns.

Rent vs. Buy Calculator

Live

If you buy

If you rent

Better financial outcome over 10 years
Buying
Net worth impact — buying
-$117,104
Net worth impact — renting
-$225,274
A simplified model — see "What this doesn't include" below before relying on it.

How this comparison works

Buying a home with a mortgage is roughly net-worth-neutral on day one — you trade cash for an asset of equal value. What actually moves your net worth afterward is: home appreciation (gain), minus mortgage interest (pure cost, unlike the principal portion which builds equity), minus tax/insurance/maintenance (pure cost). Renting instead means your would-be down payment can grow in the market, while your net worth is reduced by the rent you pay along the way.

Buying: Net worth impact = Home appreciation − Total interest paid − Total tax/insurance/maintenance Renting: Net worth impact = Investment growth on down payment − Total rent paid

Step-by-step guide

  1. Fill in the "If you buy" column — price, down payment percentage, mortgage rate, and estimated tax/insurance/maintenance as a percentage of home value per year.
  2. Fill in the "If you rent" column — the monthly rent for a comparable home, expected rent growth, and the return you'd expect if you invested your down payment instead.
  3. Set how many years you plan to stay before comparing.
  4. Compare the two net worth impact figures — the larger (more positive) number is the better outcome in this model.

What this doesn't include

Closing costs, selling costs (typically 6–10% combined), moving costs, and any mortgage interest tax deduction are not included.
This assumes the renter invests only the down payment amount — if renting is cheaper than owning month-to-month, investing that monthly difference too would improve the renting outcome further.

Frequently asked questions

Is buying always better long-term?

Not necessarily — it depends heavily on how long you stay, local rent-to-price ratios, and market returns. Short stays tend to favor renting because upfront and closing costs are spread over fewer years; long stays with strong home appreciation tend to favor buying.

Why doesn't the mortgage principal count as a cost?

Principal payments convert cash into home equity — you still have that value, just in a different form. Only the interest portion of your payment (and taxes/insurance/maintenance) are pure expenses with no corresponding asset.

Should this replace advice from a financial advisor?

No — this is a simplified educational model meant to illustrate the core trade-off. Your personal situation, local market, taxes, and plans for the future all matter for a real decision, so treat this as a starting point for the conversation, not a final answer.

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