Rent and Invest vs Buy Calculator
Compare renting and investing the difference vs buying a home.
See which option builds more wealth over time based on your local market.
Rent vs Buy: The Real Comparison
The classic “renting is throwing money away” argument ignores a critical fact: the money you do not tie up in a home can be invested. This calculator compares the wealth you build through each path.
The Buying Path Down payment = home price × down payment % Mortgage: 30-year fixed-rate loan on the remaining balance Monthly ownership costs: mortgage + property tax (1.2%/yr) + insurance (0.5%/yr) + maintenance (1%/yr) Net equity = home value at year n − remaining mortgage balance
The Renting Path Invest the down payment in a diversified portfolio from day one. Each month, if buying costs more than renting, invest that monthly difference too. Rent is assumed to increase 3% per year (historical average). Net wealth from renting = portfolio value at year n.
Break-Even Point The year when the buying path surpasses renting wealth is the “buy break-even.” Before that point, the renter+investor is wealthier. After it, the homeowner pulls ahead (in the assumed scenario).
Key Variables Home appreciation rate has a massive impact. National average is ~3–4%/year. Stock market historical average: ~7–10%/year (before inflation). In high-appreciation markets, buying wins earlier. In flat markets, renting may win throughout.
Important: This Is Simplified Real comparisons must also consider: closing costs (typically 2–5% when buying), tax deductions on mortgage interest, capital gains exclusion ($250k/$500k on primary residence), and rental market conditions.