Mortgages
Rent vs. Buy Calculator
"Renting is throwing money away" is a myth — and so is "buying always wins." This calculator compares both honestly: it grows your home's value and your mortgage paydown on one side, and invests the down payment plus any monthly savings on the other, then tells you which path leaves you wealthier over the years you plan to stay.
The single biggest driver — buying rarely wins on a short stay.
Long-run US home prices track roughly 3–4%/yr.
What the renter earns on the down payment they didn't spend.
Share of home value spent on upkeep annually (~1% is typical).
Buying wins over 7 years by
$4,069
Difference in your net worth at the end of the period.
- Net worth if you buy
- $173,101
- Net worth if you rent & invest
- $169,032
- Buying breaks even in
- 7
Years until buying's net worth overtakes renting.
Net worth by year — buy vs. rent
| Year | Buy | Rent & invest |
|---|---|---|
| 1 | $70,857 | $102,991 |
| 2 | $86,291 | $114,017 |
| 3 | $102,330 | $125,061 |
| 4 | $119,001 | $136,106 |
| 5 | $136,332 | $147,130 |
| 6 | $154,354 | $158,114 |
| 7 | $173,101 | $169,032 |
How this calculator works
Each month the model amortizes the mortgage, grows the home's value, and tracks ownership costs (principal & interest, property tax, insurance, maintenance). The renter starts by investing the buyer's upfront cash (down payment + closing costs); each month, whichever party pays less invests the difference, and both portfolios grow at your investment-return rate. Net worth for buying = home equity (value minus selling costs and remaining loan) plus invested savings; for renting = the invested portfolio.
Assumes a 30-year fixed mortgage, 3% buying and 6% selling costs, $1,500/yr home and $15/mo renters insurance. Taxes on investment gains and the mortgage-interest deduction are not modeled. Results are an educational estimate, not advice — real outcomes hinge on how long you actually stay and on local price and rent movements.
Try an example
Frequently asked questions
Is it better to rent or buy?
It depends mostly on how long you'll stay. Buying carries big one-time costs — roughly 2–5% to buy and 6–8% to sell — so it usually takes several years of appreciation and mortgage paydown to come out ahead of renting and investing the difference. Stay a long time and buying tends to win; move soon and renting often does.
How does this calculator compare the two fairly?
On a net-worth basis. The buyer builds equity as the home appreciates and the loan is paid down. The renter invests the money they didn't sink into a down payment and closing costs — plus, in any month renting is cheaper, the difference — at your investment-return rate. At the end we compare each side's total net worth, after selling costs.
What is the break-even point?
The year your net worth as an owner catches up to and passes your net worth as a renter. Before break-even, renting-and-investing leaves you wealthier; after it, buying does. If your realistic time in the home is shorter than the break-even, renting is likely the better financial call.
Isn't renting just throwing money away?
No more than mortgage interest, property tax, insurance, and maintenance are. Owners spend plenty that doesn't build equity either. The honest comparison isn't rent vs. mortgage payment — it's total cost of each path, including the return the renter earns on money they didn't tie up in a house.
What assumptions does this use?
A 30-year fixed loan, 3% closing costs to buy, 6% to sell, $1,500/yr home insurance, $15/mo renters insurance, and the appreciation, rent-growth, and investment returns you enter. It doesn't model the mortgage-interest tax deduction (which helps buyers who itemize) or local price swings — treat it as a strong directional estimate.
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Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.