Rent vs. Buy Calculator

Compare the long-term wealth impact of renting vs. buying a home, including opportunity costs.

Rent vs. Buy Simulation Engine

Calculated 100% locally. Zero server upload.

Purchase Variables

Home Purchase Price ($)

Down Payment ($)

Mortgage APR

Appreciation %

Prop Tax %

Maintenance %

Rent & Invest Variables

Initial Monthly Rent ($)

Annual Rent Inflation %

Market Return Rate % (S&P 500)

Simulation Years

Timeline Span10 years

Comparison Results

Buyer Net Worth$292,956Home equity minus loan

Renter Net Worth$319,003Compound portfolio value

Renting & Investing wins!

Over 10 years, renting yields a $26,048 higher net worth position.

How to Use

Set Buying Costs

Input house price, mortgage parameters, and annual maintenance/appreciation.

Set Renting Costs

Specify monthly rent, expected rent increases, and stock market return rate.

Analyze Net Worth

View the net worth difference graph over 5, 10, 20, and 30 years.

Real-World Examples & Use Cases

Relocation & Housing Decision Analysis

Individuals moving to a new city analyze whether renting or buying a home makes more financial sense over a 5 to 10 year timeline, accounting for local real estate growth and stock returns.

Evaluating Down Payment Opportunity Costs

Buyers with substantial savings compare the wealth outcome of putting 20% down on a home vs. renting and investing that down payment capital in index funds.

Assessing Property Tax and Maintenance Drag

Homebuyers evaluate how hidden ownership costs (like property tax, HOA fees, insurance, and maintenance) affect long-term real estate returns compared to renting.

How It Works

Rent vs. Buy Long-Term Wealth Comparison Model: The calculator runs a year-by-year cash flow simulation comparing two paths: 1. Home Buying Path: - Initial Costs: Down payment + closing costs (typically 2-5% of home price). - Monthly Costs: Mortgage payment (Principal + Interest) + Property Tax + Insurance + HOA + Maintenance. - Equity Growth: The home appreciates annually: Home Value_t = Price × (1 + appreciation)^t - Loan Paydown: The mortgage balance decreases according to an amortization schedule. - Net Worth = Home Value - Remaining Loan Balance - Selling Costs. 2. Renting Path: - Initial Capital: The renter starts with the down payment and closing costs invested in the stock market: Portfolio_0 = Down Payment + Closing Costs - Monthly Savings: If renting costs less than buying in a given year, the difference is added to the stock portfolio. If renting costs more, capital is drawn. - Portfolio Growth: The portfolio grows at an expected rate (e.g., S&P 500 index return, default 8%): Portfolio_t = Portfolio_t-1 × (1 + market_return) + Annual Savings - Net Worth = Portfolio Value.

Frequently Asked Questions

Is buying always better than renting long term?▼

No. Buying can be less profitable if home price appreciation is low, property taxes are high, or if you sell the home within 5 years due to transaction fees (agent commissions and closing costs). Renting and investing the savings can outperform home ownership under many market conditions.

What is the "5% Rule" in housing?▼

The 5% rule is a quick benchmark to estimate the unrecoverable costs of homeownership: 1% for property tax, 1% for maintenance, and 3% for cost of capital (mortgage interest or opportunity cost of equity). If your annual rent is less than 5% of the equivalent home's value, renting is likely more financial advantageous.

What should I budget for annual home maintenance?▼

A standard rule of thumb is to budget 1% to 2% of the home's value annually for maintenance, repairs, and capital improvements (like roofs or HVAC replacement).

How do transaction costs affect the comparison?▼

Buying incurs closing costs (2-5% of purchase price), and selling incurs commissions and fees (5-6% of sale price). These high entry/exit barriers mean you typically need to stay in a home for at least 5 to 7 years to amortize these costs and break even compared to renting.

Disclaimer: The results provided by this calculator are estimates for informational and educational purposes only and do not constitute professional financial advice. Always consult with a qualified financial advisor before making any major financial decisions.

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