Rent vs Buy: More Than a Monthly Payment
A useful comparison includes mortgage amortization, down payment, closing and selling costs, maintenance, taxes, insurance, rent increases, home appreciation and the return that unused cash might earn. Comparing rent only with a mortgage payment can be misleading.
How Home Equity Is Modeled
Each mortgage payment reduces principal according to the amortization schedule. The calculator also applies your home-appreciation assumption, then subtracts the remaining mortgage and estimated selling costs to calculate equity.
How Renting Is Modeled
Rent rises annually at your chosen rate. The model assumes the initial down payment and closing costs remain available to invest, then adds or withdraws the difference between annual renting and buying cash flows.
Interpreting the Break-Even Point
The break-even year is not a guarantee. It shows when modeled buying net cost first becomes no greater than renting net cost. Small changes in appreciation, investment return or selling costs can move it substantially.
Rent vs Buy Calculator FAQ
Is buying always better than renting?
No. The outcome depends on purchase price, rent, financing, how long you stay, ownership costs, property appreciation and the return available on invested cash.
Does the comparison include home equity?
Yes. Estimated equity is home value minus the remaining mortgage and modeled selling costs at the end of each year.
What is the opportunity cost of a down payment?
Money used for a down payment and closing costs cannot simultaneously remain invested. The model grows that starting amount and later cash-flow differences at the entered investment-return assumption.
How is the break-even year calculated?
It is the first modeled year when buying reaches an equal or stronger estimated net position than renting under the entered assumptions.
Are taxes included?
Property tax is included as an ownership cost. Personal income tax, mortgage-interest deductions, capital-gains rules and other jurisdiction-specific tax effects are not modeled.
Is the recommendation financial advice?
No. It is a mathematical comparison based only on your assumptions and does not predict future markets or personal circumstances.
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Disclaimer: This model is illustrative, not financial advice. Property prices, rents, returns, taxes and actual ownership costs can differ materially.