What does the renter-side investment return actually apply to?

It applies to the cash that would have gone into the purchase up front and to the monthly cost gap between owning and renting. If owning costs more in a given month, the renter-side balance is reduced by that difference. If owning costs less, the renter-side balance grows by that monthly saving.

Why do selling costs matter so much?

Selling costs reduce the cash you keep when you exit the home. On short stays, that friction can overwhelm a few years of principal paydown and appreciation, which is why buying can still lose even if the mortgage payment is close to rent.

What counts as owner costs here?

Owner costs are the recurring non-mortgage costs you choose to model: property tax, insurance, HOA or condo fees, and maintenance. You can enter them as direct annual amounts or, for tax/insurance/maintenance, as simple percentages of home value so the assumption stays visible and editable.

Why can the answer flip when I change the stay length?

Because buying has larger entry and exit friction up front, while renting keeps more cash flexible. Over time, mortgage paydown and appreciation can help the buy path catch up. If you shorten the stay, friction dominates. If you lengthen it, equity growth has more time to work.

Does this prove that buying is better after a fixed number of years?

No. This is a pre-tax estimate driven entirely by the assumptions you enter. Change rent growth, appreciation, selling costs, owner costs, or the renter-side return, and the break-even point can move a lot or disappear entirely.

Rent vs. Buy Calculator

Compare renting and buying over your planned stay length, including mortgage payoff progress, owner costs, appreciation, selling friction, and the invested value of renter-side cash.

Currency

Essential inputs

Monthly rent

How long you expect to stay

years

Home price

Down payment input

Down payment

Mortgage rate

Loan term

years

Advanced assumptions

Annual rent increase

Purchase closing costs

Selling costs

% of sale price

Expected home appreciation

Renter-side investment return

Owner cost assumptions

Owner cost input

Property tax

Insurance

Maintenance

HOA / condo fees

Examples

Enter values above to see results

How It Works

Formula

L = H - D \;

M = L \times \frac{i(1+i)^n}{(1+i)^n - 1}

B_t = L(1+i)^t - M \times \frac{(1+i)^t - 1}{i}

S_t = H_t \times (1-c) - B_t

R_t = R_{t-1}(1+r) + (C_{\text{own},t} - C_{\text{rent},t})

$L$: Loan principal after the down payment(currency)
$H$: Initial home price(currency)
$D$: Down payment(currency)
$M$: Monthly principal-and-interest mortgage payment(currency / month)
$i$: Monthly mortgage interest rate
$n$: Total mortgage term in months
$B_t$: Remaining loan balance after month t(currency)
$S_t$: Owner equity after sale in month t, net of selling costs(currency)
$R_t$: Renter invested balance after month t(currency)

The calculator compares the two paths month by month. On the buy side it computes the mortgage payment, reduces the loan balance through amortization, adds recurring owner costs, grows the home value by your appreciation assumption, and estimates sale proceeds net of selling costs at exit. On the rent side it starts with the cash not spent on the purchase and then compounds that balance using your investment return while adding or subtracting the monthly cost gap between owning and renting.

Convert the stay length and loan term into months.
Build the mortgage schedule month by month so the remaining balance falls over time.
Grow rent, home value, and renter-side investments using the annual assumptions you entered.
Treat amount-based owner costs as flat annual budgets; treat percent-based tax, insurance, and maintenance as percentages of the current home value.
Compare the owner’s net sale proceeds with the renter’s invested balance at your chosen stay length, then scan the modeled months for the first crossover point.

Frequently Asked Questions

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