Compare the true long-term cost of renting vs. buying a home to make the smartest financial decision.
| Year | Buy Total Cost | Rent Total Cost | Buy Net Worth | Rent Net Worth | Better |
|---|
Fill in three tabs: Buying (home price, down payment, mortgage rate, fees), Renting (monthly rent, annual increase), and General (time horizon, investment return, appreciation). Hit "Calculate" to instantly see which option costs less and builds more wealth over your chosen timeframe.
The rent vs. buy decision is likely the largest financial choice you'll ever make — yet most people make it emotionally rather than mathematically. Consider a $400,000 home with 20% down: your mortgage payment alone is roughly $2,090/month at 6.75%, but your true monthly cost including taxes, insurance, and maintenance is closer to $3,200. Meanwhile, renting a comparable place for $2,200/month sounds cheaper — but the renter loses equity accumulation while the buyer benefits from home appreciation.
The hidden variable is what happens to the down payment. A $80,000 down payment invested in a diversified portfolio averaging 7% annually grows to about $157,000 in 10 years. That's real opportunity cost the buyer gives up. On the flip side, in markets appreciating at 4–5% annually, a $400,000 home grows to $592,000–$650,000, building far more wealth than any stock portfolio. Location, time horizon, and market conditions determine the winner — and that's exactly what this calculator reveals.
Buying Net Cost = Closing costs + Σ(mortgage payments + property tax + insurance + HOA + maintenance + PMI) − mortgage principal paid − (home sale price − selling costs)
Renting Net Cost = Security deposit + Σ(monthly rent × escalation + renter's insurance) − security deposit returned − investment portfolio value of down payment + difference savings invested
Each year, we track the amortizing mortgage balance, accumulating equity, home value, and compound investment portfolio. The "net worth" comparison shows your financial position under each scenario including all assets and costs.
Mortgage Payment Formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ−1], where P = loan principal, r = monthly rate, n = total payments.
In most U.S. markets, the break-even point is 5–8 years, factoring in transaction costs. In high-appreciation markets like coastal cities, it can be as low as 3–4 years. In slower markets, it might stretch to 10+ years. This calculator shows you your personal break-even year based on your inputs.
Only if you plan to itemize your deductions. Since the 2017 tax reform doubled the standard deduction ($29,200 for married couples in 2024), the majority of homeowners no longer benefit from itemizing. If you have a large mortgage and high state income taxes, it may still apply — adjust the tax bracket input to model this.
The S&P 500 has returned approximately 10% annually before inflation (7% after inflation) over long periods. For a conservative estimate, use 5–6%. For moderate, use 7–8%. Avoid using returns above 10% as these are not realistic long-term expectations for most investors.
Yes. If you enter a down payment below 20%, PMI is automatically applied based on the PMI rate you set in the General tab (default 0.8% annually). PMI is removed from the calculation once your loan balance drops below 80% of the original home price.