Rent vs buy calculator
Compare buying a home with renting and investing the difference: equity after selling costs against an invested portfolio, year by year, with the break-even year.
After 10 years, renting leaves you ahead by
Buying: home equity after selling costs of $259,102. Renting and investing the down payment plus any monthly savings: $268,213. Within this period, buying never pulls ahead. The mortgage payment is $2,023 a month.
Assumes a 30-year fixed mortgage, 3% closing costs to buy and 6% to sell, property tax and upkeep as a share of the home's value, and that the renter invests the down payment, closing costs and any month the renter spends less. Taxes, mortgage interest deductions and PMI are not included.
How this calculator works
The buyer pays a down payment and closing costs, then the mortgage, property tax, maintenance and insurance each month. Their wealth is the home's value after selling costs, minus what is left on the loan.
The renter keeps the down payment and closing costs invested, pays rent, and invests whatever they save each month compared with the buyer. If rent costs more, they draw from the investments.
The calculator compares the two each year and shows when buying pulls ahead, if it does.
Buy: home value × (1 − 6% selling cost) − loan balance · Rent: invested savings growing at your returnCommon questions
Is it better to rent or buy?
It depends mostly on how long you stay, the price-to-rent ratio where you live and mortgage rates. Buying usually wins over long stays; renting often wins if you might move within five to seven years.
Why does staying longer favor buying?
Buying and selling cost around 9% of the price together. A longer stay spreads those costs out and gives the home more time to grow and the loan more time to be paid down.
What is the price-to-rent ratio?
The home price divided by a year's rent for a similar place. Above about 20, renting tends to look better; below about 15, buying tends to look better.
Does the renter really invest the difference?
Only if they do it automatically. The comparison is fair only when the money a renter saves is actually invested, not spent.
What is not included?
Income tax effects such as the mortgage interest deduction, private mortgage insurance and renter's insurance. Adjust the insurance field to include what fits your case.
FatDCA calculators are educational estimates, not investment, tax or legal advice. Results depend on the assumptions you enter, and past returns do not predict future returns.
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