Rent vs Buy Calculator — Should You Rent or Buy a Home?
Should you rent or buy? Compare your net worth after 5, 10, or 25 years of renting vs owning the same home. Accounts for mortgage paydown, appreciation, closing and selling costs, rent increases, and what a renter earns investing the difference. Free.
The rent-vs-buy decision is a net-worth race, not a monthly-payment comparison. Buying builds equity through principal paydown and appreciation, but carries closing costs, property tax, maintenance, and selling costs at exit. Renting is cheaper up front — and a disciplined renter who invests the down payment and any monthly savings can come out ahead in flat markets. This calculator simulates both paths year by year and shows who has more net worth at the end of your hold period, plus the break-even year where owning pulls ahead.
Inputs
Land transfer tax, legal, inspection — % of price
Realtor commission + legal when you eventually sell
Results
Buying Advantage
$49,358
Positive = buying wins; negative = renting wins
Verdict
✓ Buying comes out ahead
Owner Net Worth (end of horizon)
$411,811
Renter Net Worth (end of horizon)
$362,453
Monthly Cost of Owning (yr 1)
$3,750
Break-Even Year
6.0 years
Understanding This Calculator
Learn how a year-by-year net-worth simulation compares renting and owning fairly — including the investment returns a renter can earn on the cash a buyer ties up.
How the math works
The calculator simulates both paths year by year over your hold period and compares ending net worth.
- Owner net worth = home value × (1 − selling costs) − remaining mortgage balance + any invested surplus. The home appreciates annually; each year of mortgage payments reduces the balance.
- Renter net worth = an investment portfolio seeded with the down payment plus closing costs (the cash the buyer spent), growing at your investment return.
Each year, whichever side has the cheaper monthly cost invests the difference — usually the renter early on (rent below the all-in ownership cost of mortgage + taxes + upkeep), but rent rises annually while the mortgage payment does not. The break-even year is the first year owning pulls ahead.
Worked example
Consider a $500,000 home with $100,000 down at 5% over 25 years, versus renting at $2,200/month.
- Mortgage ≈ $2,326/month; adding $9,000/year of taxes and upkeep makes ownership ≈ $3,076/month
- The renter starts with about $110,000 invested (down payment + ~2% closing costs) and invests the ~$876 monthly saving
- The owner builds equity through appreciation and principal paydown, minus ~5% selling costs at exit
With 3% appreciation, 2.5% rent growth, and a 6% investment return, the two lines typically converge somewhere mid-hold — the simulation shows exactly when for your numbers.
How to read the result
The advantage figure is the ending net-worth gap; the break-even year tells you the minimum sensible hold. If you might move before break-even, renting usually wins because closing and selling costs are spread over too few years. If you will stay well past it, owning tends to win.
The result is extremely sensitive to three guesses: home appreciation, investment return, and rent growth — small changes flip the answer, so test pessimistic and optimistic scenarios rather than trusting one run. The model also omits real-life factors (renovations, tax treatment, forced-savings discipline, stability preferences). Treat it as a framework for the decision, not a verdict.