Short answer: the winner depends mostly on how long you stay — and on two assumptions (home price growth and the return on invested savings) that most calculators bury. This one puts them in the open and plays fair: the renter invests the down payment and closing costs, and whichever path is cheaper each month invests the difference — so buying is charged its true opportunity cost, and renting isn’t assumed to blow the savings. In the prefilled example ($450,000 home vs $2,200 rent, 7-year stay), renting and investing comes out $24,574 ahead. Stretch the stay to 15 years in a cheaper market and the same math flips: buying wins by six figures. The crossover chart shows exactly when.
The renting path
| Your wealth if you buy (equity after selling + savings) | $0 |
| Your wealth if you rent & invest the difference | $0 |
| Home value at the end | $0 |
| Net sale proceeds (value − loan − selling costs) | $0 |
| Total rent paid over the period | $0 |
| Total cash to buy & own (upfront + monthly costs) | $0 |
See the year-by-year comparison
| Year | Home value | Loan balance | Wealth — buy | Wealth — rent |
|---|
Educational estimate only — not financial advice. The fair-fight rules: the renter invests the down payment and closing costs up front, and whichever path is cheaper in a month invests the difference at your chosen return — so buying is charged its true opportunity cost and renting is not assumed to spend the savings. “Wealth if you buy” assumes you sell at the end (after selling costs) so both sides end as cash. Home growth, rent growth, taxes, and maintenance are your assumptions; maintenance and tax are charged on the home’s current value. Nothing here models the non-financial value of owning (or of flexibility) — that part is yours. Your numbers never leave your browser.
How this calculator works
Two households, same income, same starting cash, simulated month by month:
- The buyer pays the down payment and closing costs, then monthly: mortgage principal & interest, property tax and maintenance charged on the home’s current (appreciating) value, insurance, and HOA. Their wealth at the end = selling the home (value − remaining loan − selling costs) plus any savings accumulated in months when buying was cheaper than rent.
- The renter invests the down payment + closing costs on day one, pays rent (rising yearly at your increase rate) plus renter’s insurance, and invests the monthly difference in every month renting is cheaper.
- Both savings funds earn your chosen investment return, compounded monthly. Wealth after N years is the finish line both sides are measured at, in cash.
Most rent-vs-buy calculators quietly assume the renter spends the down payment and every month’s savings. That assumption alone manufactures most “buying always wins” results. Here, both households are equally disciplined — the only things that differ are the costs, the appreciation, and the opportunity cost. That’s the fair fight.
The worked examples
Example 1 — 7 years, $450,000 home vs $2,200 rent (the prefilled defaults). Mortgage at 6.5%, 20% down, tax 1.1%, maintenance 1%, growth 3.5%, investments at 5%.
| After 7 years | Buy | Rent & invest |
|---|---|---|
| Wealth | $212,676 | $237,249 |
| Total cash out the door | $382,139 (incl. $103,500 upfront) | $203,549 of rent |
Renting wins by $24,574. Ownership’s monthly costs simply run too far above $2,200 rent, and seven years isn’t long enough for appreciation to claw back the $103,500 head start the renter invested.
Example 2 — 15 years, $300,000 home vs $1,600 rent. 5.5% mortgage, growth 4%, investments at 6%. Buying wins by $100,090 — and the year-by-year table shows the lines crossing around year 5. Time is the buyer’s superpower; transaction costs are front-loaded and appreciation compounds.
Example 3 — the 3-year trap. A $350,000 home with 10% down, sold after 3 years: renting wins by $49,032. Buying and selling inside a few years is how transaction costs eat a down payment.
FAQs
How long do I need to stay for buying to win? There’s no universal “5-year rule” — it falls out of your numbers. The year-by-year table names your crossover year. In the examples here it ranges from about 5 years (cheap home, moderate rent) to well past 7 (expensive home, moderate rent, high rates).
Isn’t paying rent “throwing money away”? Rent buys housing, exactly as interest, tax, insurance, and maintenance buy housing for an owner — none of those build equity either. On the defaults, the owner’s unrecoverable costs run about $2,900/month against $2,200 of rent. The honest comparison is unrecoverable cost vs unrecoverable cost, plus what the trapped down payment could have earned. That’s what this tool computes.
What investment return should I assume for the renter? Something you’d actually earn on money you might need for a future down payment — many people use a high-yield savings or balanced-fund figure (4–6%). Cranking it to 10% makes renting win almost everywhere, which tells you the assumption, not the answer. Run a grumpy case (low return, low home growth) and a rosy one, and see if the verdict survives both.
What doesn’t this calculator count? The real stuff money can’t settle: stability, control over your space, forced-savings discipline (the mortgage does make you save), and the flexibility to move for a job. It also ignores tax deductions (itemized mortgage interest), which are worth less to most filers since the standard deduction grew. The math is one input — the deciding one for the wallet, not for the life.
Educational content only — not financial advice. Results hinge on the growth and return assumptions entered; the future is under no obligation to match them. Your numbers never leave your browser.
Sources: CFPB: financial considerations of buying a home, FRED MORTGAGE30US (Freddie Mac 30-year average) Figures last verified Report a wrong number