See whether buying a home or renting and investing the difference leaves you wealthier on your move date.
Reviewed by Associate Professor Charles Lo, CPA, PhD · Updated October 13, 2026Free, no signup
Compare estimated net wealth after selling the home with the renter’s invested down payment and monthly cost differences.
Run the comparison
Input-based scenario, not live housing data or a recommendation. Growth rates use annual rate ÷ 12. Mortgage payments stop at payoff; property costs continue. Renter wealth starts with the down payment and buying costs, then adds owner cost minus rent monthly; the modeled balance can be negative. Income-tax effects, HOA, PMI and moving/renovation costs are excluded. Full method.
| Year | Home value | Mortgage | Buyer equity | Renter portfolio |
|---|
Educational estimate only. Excludes income-tax effects, HOA, PMI, renovations, moving costs, utilities and differences in property quality.
Save and Restore require Preferences consent and keep fourteen assumptions locally. Links contain all fourteen calculator inputs: price, down payment, mortgage rate/term, stay, rent, growth rates, taxes, maintenance, insurance, investment return and buying/selling costs. Use hypothetical examples for public sharing. Addresses, account identifiers, asset positions, documents and form fields are excluded; keep real financial details in local storage or a private CSV.
A rent vs buy calculator compares how much wealth you would have after buying a home with how much you would have if you rented and invested your spare cash.
Buying ties up a down payment and adds costs such as property tax, repairs and insurance. Renting keeps that cash free to invest. A fair comparison looks at both sides on the same future date: the buyer’s home value minus the loan and selling costs, against the renter’s investment account.
This calculator runs that comparison month by month. It pays down a fixed rate mortgage, grows the home value and the rent, and puts the down payment, buying costs and any monthly savings into the renter’s portfolio. Then it names the side that leads and finds the month the buyer first catches up.
Leon pays $1,900 a month in rent and is looking at a $320,000 home with 10% down. He expects to stay 10 years. Keeping the other defaults, his mortgage payment would be $1,773 a month and his first month owner cost $2,427. The calculator says buying leads by $25,816 after 10 years, with a break even at 6.0 years. If he moved after 5 years, renting would still be ahead.
For renters weighing a first home, people unsure how long they will stay in a city, and anyone told that renting is throwing money away. New to a term on this page? The investment glossary defines it in a sentence.
In this calculator’s default, a $500,000 home against $2,500 rent, renting leads by $50,039 after 7 years, but raise rent to $3,200 and buying leads by $33,255. The answer depends mostly on how long you stay, how fast home prices rise and whether the renter really invests the spare cash. Enter your local numbers and try a few stay lengths before deciding.
Renting leads or Buying leads tells you which pile of wealth is bigger on your move date. The dollar figure is the gap between them, not a profit.
Home value at your move date, minus selling costs and the loan balance still owed. It is the cash you would walk away with after the sale.
The down payment and buying costs, invested from day one, plus each month’s gap between owning and renting costs. If rent costs more than owning, the gap comes out of this pot.
The $2,463 payment in the default looks close to $2,500 rent, but property tax, maintenance and insurance lift the owner’s real cost to $3,484 a month. The buyer also hands over $110,000 that the renter can invest on day one. Compare the two piles of wealth at your move date, not the two monthly bills.
It works month by month up to your move date. The home grows by one twelfth of the yearly price growth. The mortgage payment splits into interest and principal and stops once the loan is paid off. Property tax, maintenance and insurance are percentages of the home’s current value, added to the payment to give the owner’s monthly cost.
The renter starts with the down payment plus buying costs invested. Each month that pot grows by one twelfth of the investment return, and the owner’s cost minus rent goes in. Rent then rises by one twelfth of its yearly growth. At the end, the buyer’s side is home value minus selling costs minus the loan.
| Loan | $500,000 − 20% down | $400,000 |
| Mortgage payment | 6.25% over 30 years | $2,463/mo |
| Owner cost, month one | $2,463 + 2.45% of $500,000 ÷ 12 | $3,484/mo |
| Renter invests on day one | $100,000 down + $10,000 buying costs | $110,000 |
| After 7 years | Renter investments minus buyer equity | Renting by $50,039 |
The 2.45% is property tax (1.1%), maintenance (1%) and insurance (0.35%). Because owning costs about $985 more than rent in month one, the renter invests that gap every month.
The default ($500,000 home, 20% down, 6.25% for 30 years, $2,500 rent, 7 years), changed one thing at a time.
| Change one thing | Who leads | By how much |
|---|---|---|
| Default | Renting | $50,039 |
| Move after 3 years | Renting | $43,256 |
| Stay 15 years | Renting | $76,878 |
| Renter earns 5%, not 7% | Renting | $19,916 |
| Selling costs of 3%, not 6% | Renting | $31,539 |
| Home prices rise 5% a year | Buying | $28,170 |
| Rent is $3,200 | Buying | $33,255 |
In the default, staying longer does not save the buyer, because the renter keeps investing almost $1,000 a month. Price growth and rent move the answer most.
It ignores the mortgage interest deduction, limits on property tax deductions and tax on the renter’s investment gains. Taxes can move the result either way.
HOA fees, mortgage insurance on small down payments, renovations, moving costs and utilities are not included. Add them by raising the maintenance rate.
The renter side only grows if the spare cash is invested, and markets do not rise 7% every year. The return simulator shows how uneven returns change a plan.
No. Rent pays for a place to live, and owners pay for that too through interest, property tax, insurance and repairs. In this calculator’s default, owning costs $3,484 in the first month against $2,500 rent. A renter who invests the gap and the down payment can end up ahead.
Long enough for price growth and loan paydown to cover buying and selling costs. Leon’s $320,000 home breaks even at 6.0 years. In the default $500,000 example the buyer never catches up, even after 25 years, because the renter keeps investing nearly $1,000 a month.
Yes, on both sides. A bigger down payment means a smaller loan for the buyer, but also more cash the renter could invest instead. The calculator counts the full down payment and your buying costs as the renter’s starting portfolio.
The default is 3% a year. Try a lower and a higher rate because this one guess can flip the answer. In the default, 5% makes buying lead by $28,170, while 0% makes renting lead by $148,191.
Lower rates help less than you might expect in this model. Dropping the default rate from 6.25% to 5% cuts the payment from $2,463 to $2,147 a month, yet renting still leads by $7,602 after 7 years. The tool does not model a refinance, so if rates fall after you buy, rerun it with the new rate to see the effect.
It is the first month when the buyer’s equity after selling costs is equal to or bigger than the renter’s portfolio. If it says Not in 7 yrs, the buyer never caught up before your move date, so try a longer stay.
No. It leaves out income tax effects, mortgage insurance, HOA fees, renovations, moving costs and utilities. To allow for regular extra costs, raise the maintenance or insurance rate.
Copy link preserves all fourteen calculator inputs: price, down payment, mortgage rate/term, stay, rent, growth rates, property costs, investment return and buying/selling costs. Use hypothetical examples for public sharing; addresses, account identifiers, asset positions, documents and form fields are excluded. Save and Restore keep these assumptions locally with Preferences consent. CSV includes inputs, method, summary and annual results; keep it private.
Compare hypothetical investment balances and deposits at different returns, then revisit the housing assumptions here.
Primary sources and original reference material for the concepts discussed on this page.
References added 14 October 2026.
Optional email copy
Email yourself a copy of this result and receive occasional updates about the StockEducation $1M simulator challenge. Your result stays visible either way.
Get instant educational answers about
stocks, investing, and StockEducation.com.
Educational support only. Not personal financial advice. AI responses may contain errors.
Powered by AI ●
A beginner friendly guide that covers the essential lessons and concepts every new investor should understand.
Inside You'll Learn
I can explain how investing works. I cannot tell you what to buy or what is right for your situation.
I can be wrong. Check anything important against a primary source. For decisions about your own money, speak to someone licensed.
