How it works
This calculator compares two paths with the same monthly budget. The buyer pays the down payment and closing costs, then the mortgage, property tax, insurance and maintenance. The renter invests the cash the buyer spent up front and pays rent.
Each month, whoever has the lower housing cost invests the difference at your chosen return. At the end, the buyer's net worth is the home value minus selling costs and the remaining loan, plus any invested savings; the renter's is the investment account.
Buying tends to win the longer you stay, because closing and selling costs are spread over more years and you build equity. Short stays, high price-to-rent ratios and strong investment returns favor renting.
Questions people ask
How long do I need to stay for buying to make sense?
It depends on prices, rents and rates, but with roughly 9% in combined buying and selling costs, many markets need five or more years before buying beats renting.
Why does the renter invest the down payment?
Money used for a down payment could otherwise earn a return. Counting that opportunity cost is what makes the comparison fair.
What is the price-to-rent ratio?
Home price divided by a year of rent for a similar home. Ratios above about 20 tend to favor renting; below about 15 tend to favor buying.