Rent vs. Buy Calculator
Compare the projected net worth of buying a home against renting and investing the difference, over a horizon you choose.
How to Use
- Enter the home price, down payment, mortgage rate and term you're considering, plus the current monthly rent for a comparable home.
- Enter your own assumptions for rent growth, home appreciation, maintenance, property tax + insurance, closing/selling costs, and the investment return a renter could earn on money not spent buying — none of these have a single correct value, so set them to what you genuinely believe is realistic.
- Enter how many years you want to compare (e.g. how long you expect to stay).
- The result shows a projected net worth for each path — buying (home equity at the end, minus selling costs) and renting-and-investing (the down payment, closing costs, and every year's cost difference invested at your assumed return) — plus which one comes out ahead in this specific projection.
Formula
- Buying, each year
- buy_cost = mortgage_payments_that_year + (home_value × maintenance%) + (home_value × taxes/insurance%)
- Renting, each year
- rent_cost = monthly_rent × 12 (monthly_rent grows by rent_growth% every year)
- Invested difference
- investment = investment × (1 + opportunity_return%) + (buy_cost − rent_cost), starting from down_payment + closing_costs
- Home value
- grows by home_appreciation% every year, starting from home_price
- Buy net worth
- final_home_value − selling_costs − remaining_mortgage_balance
- Rent net worth
- the invested-difference balance after the chosen number of years
Worked Example
A $300,000 home with $60,000 down, 6%/30-year mortgage, vs. $1,800/month rent, over a 7-year horizon, with 3% rent growth, 3% appreciation, 1% maintenance, 1.2% tax/insurance, 3% closing costs, 6% selling costs, and a 5% assumed investment return.
- Home value after 7 years of 3% appreciation: ≈ $368,962.16
- Remaining mortgage balance after 7 years: ≈ $215,134.53
- Buy net worth: $368,962.16 − $22,137.73 (6% selling costs) − $215,134.53 ≈ $131,689.90
- Renter's invested difference (started at $60,000 down + $9,000 closing costs, grown at 5%/year, plus/minus each year's cost difference): ≈ $104,758.52
- Difference: $131,689.90 − $104,758.52 ≈ $26,931.38, favoring buying in this projection
Result: Estimated net worth after 7 years if you buy: $131,689.90 / Estimated net worth after 7 years if you rent and invest the difference: $104,758.52 / Buying comes out ahead by $26,931.38 in this projection.
About This Tool
What this tool does
This calculator projects two paths side by side over a horizon you choose: buying a home and building equity in it, versus renting and investing everything you would have otherwise spent on a down payment, closing costs, and any extra ownership costs beyond rent — then compares the projected net worth of each path.
When to use it
Use it when weighing whether to buy or keep renting, especially to see how sensitive the outcome is to assumptions you're uncertain about — try a faster and slower home appreciation rate, or a higher and lower investment return, to see how much the answer actually moves.
What the result means
Buy net worth is the home's projected value at the end of the horizon, minus what it would cost to sell and minus whatever mortgage balance is still owed. Rent net worth is the projected value of a hypothetical investment account that starts with the money a renter never spent on a down payment and closing costs, and every year afterward gains (or loses) the dollar difference between that year's ownership costs and that year's rent.
Assumptions & limitations
Every growth and return assumption — rent growth, home appreciation, maintenance, taxes/insurance, closing/selling costs, and investment return — is a number YOU set, not a market rate this tool knows or predicts; there is no live data behind any of them, and small changes in any one can flip which side comes out ahead. Home appreciation, rent growth, and investment return are allowed to be negative, since a declining market or a down investment year are real possibilities worth being able to model, not invalid input. This tool assumes the renter actually invests every dollar of the cost difference rather than spending it, and it does not model mortgage interest tax deductions, moving costs unrelated to buying/selling, or renter's insurance. There is no single universally correct answer to "rent vs. buy" — the right choice depends on assumptions specific to your market and situation, and on non-financial factors this calculator doesn't capture at all, like stability, flexibility, and lifestyle preferences.