How to compare renting and buying
- Enter the price of the home you would buy, the down payment, mortgage rate and term, and the yearly costs of owning: property tax, maintenance and insurance, as percentages of the home's value.
- Add one-off buying costs (closing costs, transfer taxes) and selling costs (agent fees), and how fast you expect prices to rise.
- Enter the rent for a comparable home, how fast rents rise, what your investments would earn, and how many years you expect to stay.
- See which option leaves you wealthier at the end, when buying overtakes renting, and the net-worth curves for both.
How the comparison works
A fair comparison assumes both households spend the same amount. The buyer pays the down payment and closing costs up front; the renter invests that cash instead. Every month, whichever option is cheaper invests the difference at your chosen return. At the end, the buyer's net worth is the home's value minus selling costs and the remaining mortgage, plus any investments; the renter's net worth is their investment portfolio. This captures the main trade-off: owners build equity and benefit from price growth but pay interest, taxes, maintenance and big transaction costs, while renters keep their money invested and flexible.
Results depend heavily on how long you stay (transaction costs need years to recover), price growth, and the gap between mortgage rates and investment returns. Try pessimistic and optimistic values. This model leaves out tax effects such as mortgage interest deductions and capital gains rules, mortgage insurance, HOA fees and the non-financial value of stability or flexibility. Everything is calculated in your browser.
How long do I need to stay for buying to make sense?
Often five years or more, because buying and selling costs take years to recover. The breakeven year above shows yours.
What is the price-to-rent ratio?
Home price ÷ yearly rent. Above about 20, renting is often cheaper; below about 15, buying often wins.
Does it include inflation?
Yes, indirectly: rent and home prices grow at the rates you set. Use nominal returns for investments.