Buy vs Rent Calculator
Is buying a house financially better than renting? Calculate the true cost by factoring in home appreciation, investment returns, and opportunity costs. Visualize your net worth over 30 years.
Making Rational Housing Decisions
The Core Logic: Buy vs Rent
Many believe "renting is throwing money away" while "buying is investing". This ignores a key factor: Opportunity Cost. This calculator compares two parallel universes:
- The Buying Universe: You pay a down payment and mortgage. Your home appreciates (Asset), but you lose money to Interest, Taxes, and Maintenance (Sunk Costs).
- The Renting Universe: You rent. The money you would have spent on a down payment, plus any monthly savings (if Rent < Mortgage), is invested in the stock market (e.g., S&P 500).
Key Metrics
- Break-even Point: Buying usually has high upfront costs (Closing costs, high interest). Renting often wins in the short term. Over time, rent inflation kicks in while your mortgage stays fixed, making buying better. The crossing point is your break-even year.
- The 5% Rule: A rule of thumb suggests that if unrecoverable costs (Property Tax + Maintenance + Cost of Capital) are less than annual rent, buying makes sense.