Rent or buy calculator
How many years you would need to stay before buying leaves you better off than renting and investing the difference — on your own figures for prices, rents and returns.
Buying
Repairs and maintenance. A renter does not pay this.
Closing costs, paid once.
Agent fees and the like, paid when you leave.
Renting
Your guesses about the future
What the down payment would earn if it were not in the house.
Buying comes out ahead after
10 years
On these figures, leaving sooner than that leaves the renter better off.
- Owning, first month
- $2,889
- Renting, first month
- $2,200
- Buyer after 7 years
- $173,101
- Renter after 7 years
- $186,462
What each would be worth
The buyer’s figure is after selling the home and clearing the loan.
| Yr | Buyer | Renter | Buyer lead |
|---|---|---|---|
| 1 | $70,857 | $105,181 | -$34,325 |
| 2 | $86,291 | $118,485 | -$32,194 |
| 3 | $102,330 | $131,902 | -$29,572 |
| 5 | $136,332 | $159,029 | -$22,697 |
| 7 | $173,101 | $186,462 | -$13,362 |
| 10 | $234,029 | $227,919 | $6,110 |
| 15 | $354,189 | $297,112 | $57,077 |
| 20 | $518,460 | $379,198 | $139,262 |
| 30 | $1,068,429 | $617,674 | $450,755 |
This compares what each household would be worth, not which payment is lower. Both start with the same cash and spend the same each month; whoever has money left over invests it. The answer rests on your three guesses about the future — home prices, rents and investment returns — held steady for 30 years, which the real world will not do. It leaves out income tax, tax on gains, mortgage insurance and renter’s insurance, and keeps home insurance flat. An estimate, not advice.
Questions
- Why compare net worth instead of monthly payments?
- Because the two payments buy different things. Part of a mortgage payment becomes equity you get back when you sell; rent does not. But the renter keeps the down payment, and can invest it. Comparing what each household ends up worth is the only way to count both.
- Why is renting ahead in the early years?
- Buying and selling both cost money up front, and early mortgage payments are mostly interest. It takes time for rising equity to earn back those one-time costs, which is why how long you stay matters more than almost anything else.
- Which growth rates should I enter?
- Nobody knows what home prices, rents or investments will do. Enter what you believe, then change each one and watch the answer move. If the break-even year swings widely, that is the honest result: it depends on things that cannot be known in advance.