Rent vs Buy Calculator
Compare modeled renter and owner net worth with symmetric cash-flow and investment assumptions.
Content updated August 4, 2026
Buying assumptions
Renting and investment assumptions
Each path invests its available upfront cash and any monthly housing-cost advantage. Results are scenario estimates, not a forecast or a recommendation.
Compare the modeled net worth of renting and buying at the end of a chosen stay. The buying path includes down payment, mortgage amortization, purchase and selling costs, property tax, insurance, maintenance, and home-price growth. The renting path includes rent growth and renter insurance.
Opportunity cost is treated symmetrically: the renter invests the cash that would have funded the down payment and purchase costs, while either path invests any monthly housing-cost advantage it has over the other. That produces a transparent scenario comparison rather than assuming only one side saves.
The Rent vs Buy formula
Owner net worth = home value × (1 − selling cost %) − mortgage balance + owner investments · Renter net worth = renter investmentsRenter investments start with down payment + purchase costs · each month the lower-cost path invests the housing-cost difference · mortgage interest uses nominal rate/12 · growth inputs use equivalent monthly rates.
Worked example
For a one-month reference case with a 120,000 home, 20% down, 2% purchase costs, a zero-rate 12-month mortgage, 5% selling costs, 1.2% tax, 1.2% maintenance, 1,200 annual insurance, 1,000 rent, and 20 renter insurance, owner cost is 8,340 and renter cost is 1,020. The renter invests 7,320 of monthly savings, ending at 33,720 versus 26,000 of owner equity after sale costs.
Assumptions, rounding, and limitations
Assumptions
- The mortgage is fixed-rate, fully amortizing, paid monthly, and has no fees, mortgage insurance, prepayments, missed payments, or rate changes.
- Home appreciation, rent growth, and investment return are effective annual assumptions converted to equivalent monthly rates.
- Property tax and maintenance percentages apply to the modeled current home value; homeowner and renter insurance remain flat in nominal currency.
- The renter invests down payment plus purchase costs at the start, and each path invests any positive monthly cost advantage at month end.
- The home is sold at the horizon and the entered selling-cost percentage applies to that modeled sale value.
Rounding: Monthly simulation retains floating-point cents and unrounded growth rates. Currency displays round to whole major-currency units, while the comparison uses the retained values.
Limitations
- Does not include PMI or other mortgage insurance, HOA dues, utilities, repairs beyond the maintenance allowance, deposits, moving costs, refinancing, renovations, rental commissions, or vacancy.
- Does not model income-tax deductions, capital-gains tax, investment tax and fees, inflation-adjusted purchasing power, leverage risk, liquidity, volatility, or differences in housing quality.
- Growth and cost inputs are user scenarios rather than forecasts; results can change materially and are not financial, mortgage, tax, legal, or real-estate advice.
Sources
- Consider Whether It’s the Right Time for You to Buy — Consumer Financial Protection Bureau
- Principal and Interest vs. Total Monthly Payment — Consumer Financial Protection Bureau
- How Does Paying Down a Mortgage Work? — Consumer Financial Protection Bureau
What the ending net-worth comparison includes
Owner net worth is the modeled home value after selling costs, minus the remaining mortgage, plus the owner's liquid investment balance. Renter net worth is the renter's modeled investment balance. A positive difference identifies the higher modeled ending value, not a guaranteed better life or lower-risk choice.
The fixed mortgage payment uses the nominal annual interest rate divided by 12. Home value, rent, and investments use equivalent monthly growth rates so the entered annual percentage compounds to that percentage over a full year.
Why assumptions matter more than a single headline
Small changes in time horizon, appreciation, selling costs, rent growth, maintenance, or investment return can reverse the result. CFPB guidance recommends considering how long you expect to remain in the home when exploring the financial tradeoffs of renting and buying.
Mortgage principal and interest are only part of ownership cost. CFPB also identifies property taxes, homeowners insurance, and sometimes mortgage insurance as parts of a total monthly mortgage payment; this model separately includes taxes and insurance but deliberately omits mortgage insurance unless you reflect it elsewhere.
Frequently asked questions
▶How is the renter's down-payment opportunity cost handled?
The renter begins with an investment equal to the buyer's down payment plus purchase costs, then both paths earn the same entered investment return.
▶What happens when renting costs more in a month?
The owner invests the difference. When owning costs more, the renter invests the difference. This symmetric rule applies every modeled month.
▶Does owner net worth include the full home price?
No. It uses the modeled sale proceeds after the entered selling-cost percentage and subtracts the remaining mortgage before adding owner investments.
▶Are tax deductions or mortgage insurance included?
No. The model omits income-tax effects, mortgage insurance, HOA dues, utilities, moving costs, deposits, capital-gains tax, and investment taxes or fees.
▶Is the higher modeled net worth a recommendation?
No. It is a scenario estimate based on uncertain inputs and does not measure liquidity, risk, flexibility, housing preferences, transaction complexity, or future market conditions.
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Open calculator →Disclaimer: Rent vs Buy Calculator results are estimates for general information and education only, and are not financial, tax, legal or medical advice. Verify important decisions with a qualified professional.