Rent vs. Buy Calculator

A net-worth comparison, not just two monthly payments

The visible mortgage payment is only one part of buying. A homeowner also faces property tax, insurance, maintenance, closing costs, and eventual selling costs. A renter does not build home equity, but can keep the down payment invested and may have a lower monthly housing cost.

This calculator places both paths on the same timeline. The result answers a specific question: given these assumptions, which path produces more estimated net worth at the end of the selected stay? It does not declare that renting or buying is universally better.

For help choosing inputs and interpreting a close result, use the complete rent vs. buy home guide. Review the hidden costs of buying versus renting, and test the move-risk question with how long you should stay before buying.

The buyer’s modeled net worth is:

home value − selling costs − mortgage balance + invested monthly savings

The renter’s modeled net worth is:

invested down payment and closing cash + invested monthly savings

If ownership costs less than rent in a month, the difference is invested for the buyer. If ownership costs more, the difference is invested for the renter. This prevents the comparison from quietly assuming that unused cash disappears.

What counts as an ownership cost

The first-month ownership estimate includes mortgage principal and interest, property tax, homeowners insurance, maintenance, HOA dues, and PMI when the down payment is below 20%. The rent path includes renters insurance. Principal is still included in cash flow even though it builds equity; that equity appears separately in buyer net worth. This distinction avoids counting principal as both a lost cost and an asset.

Closing costs are paid upfront and do not become equity. At the end, the model subtracts a selling-cost percentage before calculating usable equity. Major renovations, utilities, tax deductions, moving costs, and local transaction taxes are not included, so add their expected impact outside the model when evaluating a real property.

Worked example

Start with a $400,000 home, 20% down, a 6.5% 30-year mortgage, and $2,200 monthly rent. Compare ten years using 1.1% property tax, $1,800 annual insurance, 1% maintenance, 3% home appreciation, 3% rent growth, 7% investment return, 3% buyer closing costs, and 6% selling costs.

The down payment is $80,000 and buyer closing costs are $12,000. The mortgage starts at $320,000. The calculator amortizes that loan monthly, grows rent and home value, and compounds each side’s investable cash. Changing the stay from ten years to four can reverse the result because transaction costs have less time to be recovered.

Stress-test the assumptions

Do not rely on one run. Test at least three cases:

• lower, expected, and higher home appreciation;
• a lower investment return rather than only a stock-market average;
• selling sooner than planned;
• maintenance above 1% for an older property; and
• rent increases below and above recent experience.

If a small assumption change flips the winner, the financial difference is fragile and nonfinancial preferences may deserve more weight. Use the mortgage affordability calculator to test payment capacity and the down payment and PMI calculator when the down payment is below 20%.

Limits of the result

Appreciation and investment returns are uncertain. Maintenance is uneven, selling costs vary, and the exact mortgage schedule depends on the loan. The calculator models a fixed-rate amortizing mortgage and assumes monthly compounding for comparison. It is an educational scenario tool, not a forecast, appraisal, tax opinion, or recommendation to buy or rent.