Should you rent or buy?
Example numbers for a typical US city. Use Change city for yours.
Buying a home () with down at on a loan, versus renting at with rent rising , over .
Tap any underlined value to change it. Everything else is under All assumptions.
Tips if you are not sure how long you will stay, or own your home outright
- Not sure how long you will stay: try a shorter number of years first; short stays usually favour renting.
- Own your home outright: set the down payment equal to the price to compare keeping it with selling and renting.
Buying leaves you with $281,351 in home equity. Renting and investing the difference leaves $384,353.
Home equity is what you would keep after selling. Invested savings is the down payment plus the monthly difference, invested at the assumed 7% return. Nominal dollars, not adjusted for inflation (All assumptions can show today's dollars). Both sides are before any tax on gains; in practice home-sale gains are often tax-free up to a limit while investment gains usually are not.
The answer only changes if home prices rise more than 4.75% a year. You assumed 3%. It also changes if your investments return less than 3.25% a year instead of 7%.
How we calculate thisFree, no ads, no account.
Pin locks in exactly what you see now, so finish your edits first. Then change any value, and the two are shown side by side.
- Buy: home equity after selling costs
- Rent: invested savings
- Buy if prices rise 4.75%/yr
Buying costs more per month by: $1,126 in Year 1, $681 in Year 10.
Buying a home () with down at on a loan, versus renting at with rent rising , over .
Tips if you are not sure how long you will stay, or own your home outright
- Not sure how long you will stay: try a shorter number of years first; short stays usually favour renting.
- Own your home outright: set the down payment equal to the price to compare keeping it with selling and renting.
Projected net worth at the end of each year: home equity if you sold, versus invested money if you rented. Nominal dollars.
| Year | Buy | Rent | Rent ahead by |
|---|---|---|---|
| 1 | $78,398 | $131,987 | +$53,589 |
| 2 | $97,525 | $154,993 | +$57,468 |
| 3 | $117,416 | $179,089 | +$61,673 |
| 4 | $138,107 | $204,341 | +$66,234 |
| 5 | $159,635 | $230,817 | +$71,182 |
| 10 | $281,351 | $384,353 | +$103,002 |
Start from a metro
Realistic local price, rent, property tax and insurance, then adjust to your home.
How we compare rent vs buy
We simulate both paths month by month: fixed-rate mortgage amortization and appreciation for buying; invested down payment plus invested savings versus owning for renting. We compare net worth annually and show where the money goes.
- Buy net = home value x (1 - selling %) - remaining mortgage - closing costs.
- Rent net = invested down payment + invested savings versus owning.
- The tax benefit reduces owner cost only when itemizing beats the standard deduction (post-2017 rules, $750k interest cap, $10k SALT cap).
Quick example
Assume a $500k home, $100k down, 6.95% for 30 years, 3% appreciation, rent $2,500/mo rising 3%/yr, and a 7% investment return. Over 10 to 15 years buying often overtakes renting if appreciation holds and transaction costs are spread out. Over 1 to 3 years renting usually wins because of closing and selling friction.
Limitations and assumptions
- Tax effects use the post-2017 rules (standard deduction, $750k interest cap, $10k SALT cap) and a single marginal rate; state income tax is not modelled beyond the Other itemized deductions field.
- Maintenance, insurance and property tax vary by market; metro prefills are state-level for tax and insurance, so adjust them.
- Returns and appreciation are uncertain; use the what-if line and a few horizons to stress-test the answer.