Rent vs buy calculator
Compare your net worth after N years of buying versus renting, counting appreciation, the return your cash could earn elsewhere and the cost of selling.
After 7 years, renting wins by
$21,436
Net worth if you buy
$119,817
Net worth if you rent
$141,253
Buying pays off after
11 yrs
Cash to buy
$45,500
Cost to own, month 1
$2,872
Rent, month 1
$2,000
- Year 1: buy vs rent
- $27,391 / $58,605
- Year 5: buy vs rent
- $86,527 / $112,970
- Year 7: buy vs rent
- $119,817 / $141,253
- Home value at sale
- $430,456
- Loan payoff at sale
- $284,811
- Selling costs
- $25,827
- Total rent paid
- $183,899
How this is calculated
- 1Buying costs the down payment and closing costs up front, then each month principal and interest, PMI (until the loan is below 80% of the price), property tax, insurance, HOA and maintenance. Tax, insurance, HOA and maintenance grow with the home's value.
- 2Renting costs the rent, which rises each year by the rent increase.
- 3Same budget both ways: the renter invests the down payment and closing costs on day one. Each month, whoever's housing costs less invests the difference. Investments grow at the investment return.
- 4Buyer's net worth = home value × (1 − selling costs %) − loan balance + the buyer's investments. Renter's net worth = the renter's investments.
- 5Buying pays off after the first year in which the buyer's net worth is at least the renter's.
Not included: income taxes (mortgage interest deduction, capital gains exclusion, taxes on investment gains), moving costs and refinancing. Small changes to appreciation and investment return swing the result a lot; try a few.
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Frequently asked questions
- What does net worth after N years mean?
- What you'd have at the end either way. For buying: home value minus the loan and selling costs. For renting: the down payment and monthly savings invested instead. The higher one wins.
- What investment return should I use?
- Use what you'd realistically earn on money you don't put into a home. Many people test a conservative long-run figure such as 5–7% a year and then try higher and lower.
- Why does buying often lose if I move in a few years?
- Buying and selling costs are large: closing costs going in and agent commissions and other costs going out. Over a short stay, appreciation and loan paydown may not cover them.
- Does this include the mortgage interest deduction?
- No. Income taxes are left out, including the mortgage interest deduction and the capital gains exclusion on a home sale. Many households take the standard deduction, so the interest deduction often doesn't apply.
- What home appreciation rate is realistic?
- Over long periods, U.S. home prices have grown a little faster than inflation on average, but local markets vary widely. Try several rates; the result often depends heavily on this one input.