Rent vs. Buy Calculator
Compare the long-term wealth of renting and investing your savings versus buying a home and building equity. This calculator simulates closing costs, taxes, maintenance, and stock market opportunity costs over time.
1. Renting vs. Buying Inputs
Market & Cost Assumptions
By year 7, buying creates more net wealth than renting and investing the difference.
Estimated Wealth after 7 Years
$148,000
Compounded stock portfolio value of initial down payment difference + monthly rent savings.
$182,000
Home equity minus outstanding loan balance and selling transaction fees (est. 6%).
How the Comparative Model Works
A breakdown of unrecoverable costs and capital opportunity modeling.
Opportunity Cost Concept
Renting retains your down payment capital. The model compounds this savings in the stock market (assumed 7% return) plus any monthly cash flow savings.
We compare this growing stock portfolio against the home equity (value minus mortgage principal) at each year.
Renting Sunk Costs
- • Monthly Rent (fully sunk)
- • Renter's Insurance premium
- • Stock opportunity loss
Buying Sunk Costs
- • Amortized Loan Interest
- • Property Taxes & Insurance
- • Maintenance costs (1.5%/yr)
- • Closing costs (2% Buy, 6% Sell)
Frequently Asked Questions
What is included in a rent vs buy calculation?
A comprehensive comparison goes beyond monthly payments. It must factor in transaction fees (closing and selling costs), ongoing homeownership expenses (taxes, insurance, and maintenance), home price appreciation, rent inflation, and the stock market opportunity cost of investing your down payment and cash savings.