Rent vs Buy Calculator
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After 7 years
Buying is ahead by $9,251
Buying pulls ahead for good by year 7
- Net worth if you buyEquity $169,513 after selling costs, plus savings invested$169,513
- Net worth if you rentDown payment and closing money invested, plus monthly savings$160,263
- Monthly cost of owning (first year)Principal, interest, tax, insurance, maintenance$3,021.15
- Monthly rent (first year)$2,400.00
- Home value at the end$491,950
- Loan balance at the end$292,919
| Year | Home value | Buy net worth | Rent net worth | Buy ahead by |
|---|---|---|---|---|
| Year 1 | $412,000 | $70,359 | $103,269 | −$32,910 |
| Year 2 | $424,360 | $85,289 | $114,110 | −$28,821 |
| Year 3 | $437,091 | $100,816 | $124,478 | −$23,662 |
| Year 4 | $450,204 | $116,970 | $134,327 | −$17,358 |
| Year 5 | $463,710 | $133,782 | $143,609 | −$9,827 |
| Year 6 | $477,621 | $151,285 | $152,273 | −$988 |
| Year 7 | $491,950 | $169,513 | $160,263 | $9,251 |
A model, not a forecast. Results are sensitive to home price growth, investment returns and how long you stay. Taxes, insurance and maintenance are held constant, and mortgage interest tax benefits are not included.
After 7 years
Buying is ahead by $9,251
Assumptions
- You pay a 30-year fixed loan with the rate shown, and the buyer pays closing costs up front.
- Whoever spends less each month invests the difference at the return you enter. The renter also invests the down payment and closing costs.
- Property tax, insurance and maintenance stay at their first-year dollar amounts; rent and home value grow at the rates you enter.
- At the end the owner sells and pays the selling costs. Taxes on gains or investment returns are not modeled.
How the comparison works
The calculator tracks two paths. If you buy, your wealth is the home's value, minus the loan balance and selling costs, plus any money you saved by owning costing less than renting. If you rent, your wealth is the down payment and closing money you did not spend, invested, plus the monthly difference if renting costs less than owning.
Early on, buying often trails because of closing and selling costs and because most of the payment goes to interest. Over a longer stay, equity growth and appreciation usually close the gap, which is why the break-even year matters.
What drives the answer
The time you stay, the rent-to-price ratio where you live, how fast home prices and rents grow, and what you would earn investing the money instead. Change those inputs: small changes can flip the result, which is the honest message of any rent-versus-buy model.
Frequently asked questions
Is renting throwing money away?
Not by itself. Rent buys housing, just as owning costs include interest, taxes, insurance and maintenance that you do not get back. Owning builds equity through principal payments and any price growth, but also carries costs and risks.
How long do I need to stay to make buying worthwhile?
Often around five to seven years, but it varies with prices, rates and local rents. The break-even year shown here is for your inputs only.
What about the mortgage interest deduction?
It only helps if you itemize and your deductions exceed the standard deduction, which many households do not. This model leaves tax effects out so the comparison is simple and transparent.
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Estimates for education and planning only. TotalMonthly is not a lender or advisor; confirm figures with a licensed professional. See the methodology and disclaimer.