Compare net worth from buying with renting and investing, year by year
Updated 2026-09-28
Buying beats renting when, by the time you move, the home equity you keep after selling costs is worth more than renting and investing the down payment, closing costs and any monthly savings. Enter the price, rate, rent and how many years you plan to stay; the calculator compares net worth year by year and shows the first year buying comes out ahead. see what price fits your income · check the monthly payment · browse every mortgage calculator.
Buying
Result
After 10 years
—
Buyer net worth
$200,119
home equity after selling + investments
Renter net worth
$195,115
invested down payment + savings
Buying breaks even in
Year 10
Monthly P&I
$2,275
BuyRent and invest
Year
Home value
Loan balance
Buyer net
Renter net
Estimates for planning, not a loan offer or financial advice. Every rate and cost here is a number you enter or an example you can change; confirm figures with your lender.
How this rent vs buy comparison works
The calculator follows two households month by month for as long as you plan to stay. The buyer pays the down payment and closing costs, then principal and interest, property tax, insurance, maintenance and HOA dues; at the end the home is sold, selling costs are paid and the loan is paid off. The renter invests the cash the buyer spent up front and pays rent. Each month, whichever household spends less invests the difference at the return you enter. The better choice is the one with more net worth at the end.
Worked example
With a $400,000 home, 10% down, an example 6.5% rate, 1.1% property tax, 1% maintenance, 3% closing and 6% selling costs, 3% yearly growth in home values and rent, a 6% investment return and rent of $2,300 a month, after 10 years the buyer's net worth is about $200,119 and the renter's about $195,115. Buying pulls ahead in year 10. Change any figure to match your market.
What moves the answer most
How long you stay. Buying and selling costs are large one-time hits, often around 9% of the price combined in this example, so short stays favor renting.
Price-to-rent ratio. Where homes cost many times the yearly rent, renting and investing tends to win; where rent is high relative to prices, buying does.
Mortgage rate vs investment return. A higher mortgage rate makes owning more expensive; a higher assumed return makes the renter's invested savings grow faster.
Home value growth. Appreciation builds the buyer's equity. Test a conservative figure too.
What it leaves out
Taxes on investment gains, the mortgage interest deduction (most households take the standard deduction), capital gains on the home (the IRS home-sale exclusion covers up to $250,000 of gain, $500,000 for joint filers, if you qualify), renter's insurance and moving costs. It also cannot value stability, control over the home or flexibility to move. Use it to see whether the numbers clearly favor one side or whether the decision is close.
It depends mostly on how long you stay. Buying has large one-time costs (closing costs now, selling costs later) that take years of equity growth to recover, so short stays usually favour renting and long stays usually favour buying. The result also turns on the rent, the rate, home price growth and what your invested savings would earn.
Is it better to rent or buy?
It depends on how long you stay, the price-to-rent ratio where you live, your mortgage rate, how fast home values and rents rise, and what you would earn investing the money you do not put into a home. Buying usually needs several years to overcome closing and selling costs. The calculator compares your net worth under each choice year by year.
What does the break-even year mean?
It is the first year in which selling the home (after selling costs and paying off the loan) plus any money the buyer invested would leave the buyer with at least as much as the renter's invested savings. Before that year, renting comes out ahead under your assumptions.
Why does the renter invest money?
To compare fairly, the renter keeps the down payment and closing costs invested, and whichever household spends less in a month invests the difference. Otherwise buying would be credited with forced saving while renting is credited with nothing.
What is the 5% rule for renting vs buying?
A shortcut: multiply the home price by 5% (roughly 1% property tax, 1% maintenance and 3% cost of capital) and divide by 12. If you can rent a similar home for less than that, renting may be cheaper. It ignores your actual rate and time frame, which this calculator includes.
Are the appreciation and investment returns predictions?
No. They are assumptions you choose. Try lower and higher values; if the answer flips with small changes, the decision is close and other factors (stability, flexibility, space) matter more.