Recommendation
Buying overtakes renting after year 4.
Buying ends ahead by $47,084 over 7 years after ownership costs, home equity, and investable cash flow differences.
Ending net position: buy $244,511 vs rent $197,427.
Housing
Buy vs Rent Decision Engine
Model housing cash flow, equity, renter investing, and exit assumptions to compare the full financial outcome.
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See all decisionsTimeline
Start with the life plan
The stay length is usually the first emotional filter. A shorter stay gives closing costs less time to earn back.
Rent scenario
Model the renter path
Rent is not just a payment. It also preserves cash that can stay invested.
Starting monthly rent for the alternative housing option.
$
Monthly insurance paid by the renter.
$
Extra recurring contribution added to the renter portfolio on top of avoided upfront cash and monthly savings.
$
Buy scenario
Model the ownership path
Ownership turns monthly payments into equity, but it also adds friction, maintenance, and concentration risk.
The purchase price used to calculate your down payment, loan size, and eventual home value.
$
How long the mortgage lasts if you follow the scheduled payment amount.
Advanced ownership costsTaxes, insurance, maintenance, closing costs, and owner-side investing.
Annual property tax paid by the homeowner.
$
Monthly homeowners insurance cost.
$
Average monthly reserve for repairs, upkeep, and replacements.
$
Monthly condo or homeowners association fees, if any.
$
Purchase-side costs such as legal fees, inspections, and land transfer taxes.
$
Extra recurring contribution added to the owner-side portfolio on top of any monthly cost advantage.
$
Assumptions
Core assumptions in this model
Keep the big market assumptions visible, and open advanced settings only when the details matter.
Advanced market assumptionsAppreciation, selling friction, and investment return can swing the answer.
Exit friction on the home sale such as realtor commissions and legal costs.
%
Home value grows at 3.5% per year.
Rent grows at 3.0% per year.
Invested cash compounds at a shared 6.0% per year.
Manual investment contributions are modeled on a Monthly (12) cadence.
Selling costs are modeled at 5.0% of the exit home value.
Model ruleWhichever option is cheaper in a given month invests the difference instead of letting it disappear.
Result
Read the result like a decision
The recommendation is based on ending net worth, break-even timing, and how fragile the assumptions are.
Guardrails and caveats
- - Maintenance looks low for this home value. Understating maintenance can make buying look better than reality.
Buy outcome
$244,511
Rent outcome
$197,427
Buy Recurring Cost
$2,827/mo
Monthly Rent
$2,425/mo
How Net Position Evolves
Watch the ownership equity line, renter portfolio, and final crossover move as assumptions change.
Break-even Path
The line crosses zero when buying overtakes renting on net worth.
Ending Net Position
Compare final net position and net cost at the selected horizon.
Cumulative Cash Outflow
Compare the cash required to keep each housing path going over time.
What changes the answer most?
Each card shows how much the ending net worth gap moves when one assumption changes and everything else stays the same.
Years staying
$53,385Moves the result toward buying.
Appreciation
$39,452Moves the result toward buying.
Rent inflation
$7,710Moves the result toward buying.
Opportunity cost
-$12,332Moves the result toward renting.
Mortgage rate
-$29,702Moves the result toward renting.
Year-by-year view
| Year | Owner net | Renter net | Home value | Mortgage balance | Buyer cash outflow | Renter cash outflow |
|---|---|---|---|---|---|---|
| 1 | $89,678 | $113,146 | $466,005 | $354,877 | $132,922 | $29,100 |
| 2 | $112,783 | $127,277 | $482,580 | $349,482 | $166,843 | $59,064 |
| 3 | $136,857 | $141,365 | $499,743 | $343,799 | $200,765 | $89,918 |
| 4 | $161,942 | $155,379 | $517,518 | $337,814 | $234,686 | $121,688 |
| 5 | $188,084 | $169,287 | $535,924 | $331,510 | $268,608 | $154,403 |
| 6 | $215,327 | $183,053 | $554,985 | $324,870 | $302,530 | $188,090 |
| 7 | $244,511 | $197,427 | $574,725 | $317,877 | $336,451 | $222,779 |
Disclaimer
The results generated by this calculator are estimates for informational purposes only.
They are based on simplified assumptions and the information you provide.
Money Wizards does not provide financial, legal, tax, or investment advice.
Always verify results and consult a qualified professional before making financial decisions.
Live simulation
Buying looks stronger in this scenario
- Break-Even Timeline
- Year 4
- Estimated net worth difference
- $47,084
- Monthly cost difference
- $402
Buying catches up by month 41 (~3.4 years) once equity, sale costs, and renter investing are included.
Buying is ahead at the end of the horizon.
Buying costs more per month before investment effects.
Why this result
Buying overtakes renting after year 4.
Ending net position: buy $244,511 vs rent $197,427.
Medium confidenceMethodology
What This Buy vs Rent Model Covers
This tool is built for people who want more than a monthly payment comparison. It models cash flow, equity, renter-side investing, owner-side investing, and the drag created by transaction costs.
- Compares the full cost of ownership against the full cost of renting over your chosen horizon.
- Includes home equity, renter portfolio growth, owner-side investing, and selling costs at exit.
- Highlights break-even timing so you can see when buying starts to pull ahead, if it does at all.
- Shows the assumptions that drive the answer so you can stress-test optimism before acting.
FAQ
When is a buy vs rent calculator most useful?
It is most useful when your time horizon, down payment, expected rent growth, and investment assumptions could materially change the better option.
Does the model account for opportunity cost?
Yes. The renter can invest avoided upfront cash and any monthly savings, while the owner can also invest if ownership becomes cheaper in a given month.
What should I stress-test first?
Short holding periods, high selling costs, low maintenance reserves, and aggressive appreciation assumptions can all distort the recommendation if left unchecked.