Rent vs. Buy Calculator
Should you buy a home or rent and invest the difference? Plug in your numbers and see which path builds more wealth.
Down payment
20% ($80,000)Mortgage rate
7%Time horizon
30 yearsAfter 30 years
Renting & investing builds $822,369 more wealth
Own, year 1
$2,996/mo
$2,129 mortgage + $367 tax + $500 upkeep
Rent, year 1
$2,000/mo
Renter invests the $996/mo difference
Assumes a 30-year fixed mortgage, 6% selling costs, and 3% yearly rent increases. Whoever pays less each month invests the difference. For illustration only.
How This Calculator Works
This calculator compares two scenarios using the same monthly budget. The Buy scenario assumes a 30-year fixed mortgage with property taxes, insurance, and maintenance. Net equity is calculated after 6% selling costs.
The Rent & Invest scenario invests your down payment on day 1. Each month, whoever has the lower housing cost invests the difference: the renter while owning costs more, and the buyer once rising rent passes the cost of owning.
Neither answer is universally right. The result depends on your local market, how long you plan to stay, mortgage rates, and whether you'd actually invest the difference. Use the advanced assumptions to match your specific situation.
Key Factors That Shift the Result
- Mortgage rate: Higher rates make buying more expensive. At 7%+, renting often wins.
- Time horizon: Buying almost always loses under 5 years due to transaction costs. The longer you stay, the more buying catches up.
- Price-to-rent ratio: If a home costs more than ~15x annual rent, the market favors renting.
- Discipline: The rent scenario only works if you actually invest the difference. Homeownership forces savings through mortgage payments.
Track your home equity alongside your full net worth
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