Rent vs buy calculator
The renter invests the down payment and closing costs; each year, whoever spends less invests the gap. At the end, the owner sells (minus selling costs) and pays off what is left of the loan.
Result
11,218.93Buying is ahead at the end by
- Owner’s wealth (after selling)
- 179,344.32
- Renter’s wealth (investments)
- 168,125.39
- Year buying pulls ahead
- 9
- Total rent paid
- 157,675.98
- Total spent by the owner
- 277,453.33
- Gap if prices grow 1 point slower (+ = buying ahead)
- -18,939.28
- Gap if prices grow 1 point faster (+ = buying ahead)
- 44,255.35
Inputs
- Monthly rent
- 1200
- Yearly rent increase
- 2
- Home price
- 300000
- Down payment
- 20
- Mortgage rate
- 3.5
- Loan term
- 25
- Comparison period
- 10
- Closing costs
- 8
- Selling costs
- 5
- Yearly owner costs
- 1.5
- Yearly home price change
- 2
- Investment return
- 4
How it is calculated
Owner: down payment + closing costs at the start, then mortgage payments and owner costs each year.
Result
Buying is ahead at the end by
- Owner’s wealth (after selling)
- 179,344.32
- Renter’s wealth (investments)
- 168,125.39
- Year buying pulls ahead
- 9
How it is calculated
- Owner: down payment + closing costs at the start, then mortgage payments and owner costs each year.
- Renter: invests the down payment and closing costs, pays rent, and invests the gap each year when spending less.
- At the end: owner = home value − selling costs − loan balance + their investments.
- Sensitivity: the same maths with home prices growing 1 point slower, then faster.
Example
Rent 1,200, a 300,000 home with 20% down, 3.5% over 25 years, over 10 years (8% closing, 5% selling, 1.5% owner costs, prices +2%, investments 4%): 179,344.32 against 168,125.39, buying is ahead by 11,218.93 and pulls ahead in year 9. With prices at +1%: −18,939.28; at +3%: 44,255.35.
Good to know
- Leaves out taxes (capital gains, investment income, mortgage interest deduction), subsidies and major repairs.
- The answer depends mostly on home prices and how long you stay: check the sensitivity lines.
- Assumes the renter really invests every dollar saved.
Frequently asked questions
What is this tool used for?
The renter invests the down payment and closing costs; each year, whoever spends less invests the gap. At the end, the owner sells (minus selling costs) and pays off what is left of the loan.
How is the result calculated?
Owner: down payment + closing costs at the start, then mortgage payments and owner costs each year.
What should I check before using the result?
Leaves out taxes (capital gains, investment income, mortgage interest deduction), subsidies and major repairs.