About this calculator
The rent vs buy calculator answers the only question that matters about housing: over the years you plan to stay, will buying make you wealthier than renting? The math is not obvious — owning has hidden costs (closing, selling, maintenance, opportunity cost on the down payment) that frequently make renting come out ahead, especially for short stays.
The model
We simulate every month for the years you plan to stay, tracking both scenarios in parallel:
- Buy: down payment + closing costs (3%) upfront, then each month: P&I + property tax (1.10%/yr) + insurance ($1,400/yr) + maintenance (1%/yr of price). At the end, sell the house at appreciated value minus 6% selling costs, and subtract remaining loan balance to get equity.
- Rent: down payment is invested at your chosen return rate (default 7%). Rent inflates 3% annually. Each month, any cash-flow difference between buying and renting also gets invested.
The "winner" is whichever scenario produces lower net cost (cash out minus what you got back, in equity or investment growth).
Why short stays favor renting
Closing costs (~3% of purchase) and selling costs (~6% of sale) together consume nearly a decade of typical equity gains. If you sell within 3 years, you almost always lose money on the transaction — even if the home appreciated.
The opportunity-cost trap
Many "buying is always better" arguments compare buying to renting and spending the difference. The honest comparison invests the down payment and any monthly savings — that's what this calculator does. Investment returns of 5–8% are realistic; appreciation assumptions above 5% are not, by historical standards.
Variables that flip the answer
- Years staying — the single biggest lever. Each extra year favors buying.
- Home appreciation — 1% drop can flip 7-year scenarios.
- Investment return assumption — pessimistic returns help buying; optimistic returns help renting.
- Down payment size — more down means no PMI and less opportunity cost; bigger numbers favor buying.
What the calculator does not capture
The mortgage interest tax deduction (now only valuable for high-income itemizers post-2017). The intangible value of owning. The flexibility cost of being locked to a city/job. Use the number here as the financial baseline, then weigh those qualitative factors.