Phase 2 · Wealth & Leverage

Rent vs Buy Calculator

Buying isn't automatically 'building wealth' and renting isn't 'throwing money away'. We track both net worths — including the down payment you could have invested — and tell you which actually wins.

Is it better to rent or buy a house?

It depends almost entirely on how long you stay. The honest comparison tracks both net worths: the buyer's equity after selling costs, and the renter's portfolio from investing the down payment plus any month renting is cheaper. Buying wins slowly through equity; renting wins immediately through the invested down payment.

Worked example (defaults on this page): a $450,000 home, 20% down at 6.5%, versus $2,200 rent over 7 years — the buyer ends with $212,676 of equity, the renter with $244,334. Renting wins by $31,659.
The renter starts $103,500 ahead — the down payment plus 3% closing costs — invested from day one at the market return. That head start is what buying has to overcome.
Selling costs about 6% of the sale price, which is why short holds favour renting: at 7 years the home has appreciated to $572,526 but $34,000 of that goes to the sale.
Ownership costs roughly 2% of the home’s value a year beyond the mortgage — taxes, insurance, maintenance. "Throwing money away on rent" ignores that those dollars are also gone.

Under the hood

The math, fully exposed

We simulate every month and compare total net worth at the end. Assumptions: ~2%/yr of home value for tax + insurance + maintenance, 3%/yr rent inflation, 3% buying closing cost, 6% selling cost:

Buyer pays = mortgage P&I + ~2%/yr of value; equity = appreciated value − selling cost − loan balance

Renter invests = down payment + closing, plus any month the buyer's cost is higher

Both portfolios grow at your investment return; home grows at appreciation

Buyer net worth = home equity + any invested savings

Winner = higher net worth at your horizon

Symmetric and fair: whoever has the lower monthly cost invests the difference, so neither side gets a free advantage — the comparison is apples to apples.
The core tension: home appreciation versus investment return. When your expected market return clearly beats appreciation, renting and investing often wins — especially over shorter horizons.
Money isn't everything: this models dollars only. Stability, control, and the freedom to move are real and personal — weigh them alongside the number.

Your directives

What to do next, based on your numbers

Adjust the sliders to generate tailored recommendations.

Answers

Frequently asked questions

Is it better to rent or buy?

It genuinely depends — which is why honest calculators give different answers. Buying builds equity and hedges rent inflation, but ties up a large down payment and adds maintenance, taxes and transaction costs. Renting frees that capital to compound in the market. The winner hinges on your time horizon, mortgage rate, expected home appreciation and investment return. This tool runs both forward and compares total net worth.

What is the opportunity cost of a down payment?

A down payment isn't free money sitting in your home — it's capital that could have been invested. If a $90,000 down payment would have grown at 7% in the market, the real cost of buying includes the wealth that capital didn't build. Most legacy rent-vs-buy tools ignore this, which is exactly why they're biased toward buying.

Why do rent-vs-buy calculators disagree so much?

Because the answer is dominated by assumptions: home appreciation rate, investment return, how long you stay, and ownership costs (tax, insurance, maintenance). Small changes flip the result. The useful move isn't finding "the" answer — it's sliding the levers to your real numbers and seeing how sensitive the call is.

How long do I need to stay for buying to pay off?

Long enough to outrun the transaction costs — typically a 3% closing cost to buy and ~6% to sell. Those round-trip costs mean buying rarely wins for short stays; the longer your horizon, the more equity and rent-inflation savings tilt it toward owning. Lower the years slider and watch renting pull ahead.

Open the full Rent vs Buy Math calculator on EmpireCalc →