§ 01 / TOOL
$600,000 vs $3,000/mo · 10y.
STATUS ACTIVEMODE INVEST DIFFLATENCY <1MS
> INPUT
MODE INVEST-THE-DIFFERENCE
// HOME PRICE
$
// DOWN %
%
// MORTGAGE RATE
%
// MONTHLY RENT
$
// YEARS
yrs
RENTING WINS.
+$162,322
// RESULT AT YEAR 10
// BUY
$263,237
Net after sale at year end
// RENT + INVEST
$425,560
Portfolio value at year end
// MONTHLY OWN COST (YR 1)
$5,286
// MONTHLY RENT (YR 1)
$3,000
// ADVANTAGE
$162,322
// INPUTS
$600,000 · 5% down · 7.5% · $3,000/mo rent · 10y
Over 10 years on a $600,000 home with 5% down at 7.5%, compared to $3,000/month rent: renting comes out $162,322 ahead.
§ 02 / ABOUT
The actual rent-vs-buy math.
"Renting is throwing money away" is the oldest bad advice in personal finance. The honest answer depends on home price, rate, rent, time horizon, and — crucially — what you'd do with the money you don't put into a down payment. This tool simulates the invest-the-difference scenario year by year.
// WHAT BUYING REALLY COSTS
- Mortgage interest — most of your payment early on, not principal.
- Property tax + insurance — ongoing, indexed to value.
- Maintenance — budget ~1% of home value per year over long periods.
- Transaction costs — closing costs in, 6% broker commission out. These crush short-term ownership.
// WHAT RENTING REALLY DOES
If buying costs $4,000/month all-in and renting costs $2,500, a disciplined renter can invest the $1,500/month difference plus the down payment not locked in equity. Over long horizons and with market returns, that invested-difference portfolio often beats home appreciation — especially at high rates and in expensive metros.
The tool isn't a recommendation — it's a simulation. Stability, optionality, and community all matter, and none of them show up in a spreadsheet.
Related: Mortgage, Compound Interest, Cap Rate.
§ 02 / FAQ
Questions. Answered.
How does this comparison work?+
It uses the "invest the difference" framing. Both scenarios start with the same cash (down payment + closing costs) and the same yearly housing budget — which is the buyer’s actual ownership cost. The renter spends that budget on rent and invests whatever’s left. After N years, we compare the buyer’s equity (after selling fees) with the renter’s portfolio. Whichever is higher wins.
What assumptions are baked in?+
To keep the form compact: 30-year mortgage, 1.1%/yr property tax, 1.5%/yr insurance + maintenance, 3%/yr home appreciation, 3%/yr rent growth, 7%/yr investment return (stock market long-run average), 2% closing costs when buying, 6% selling costs (realtor commission). These are rough US averages; your actual numbers may differ in either direction.
Why does the winner flip when I change years?+
Owning carries upfront costs (closing fees, sale fees, slow equity build-up in early years). Short horizons favor renting because you haven’t amortized those costs. Long horizons favor buying because appreciation and principal paydown compound. The crossover point — the "breakeven year" — is usually 5–8 years in normal markets but can shift dramatically with rate, rent, and price ratios.
What about taxes and mortgage interest deduction?+
Not modeled in v1. For many households after the 2018 standard deduction increase, the mortgage interest deduction no longer matters (standard deduction is higher). For high earners in high-tax states, it still can. Assume the output is pre-tax for both scenarios — both get similar treatment in a fair comparison.
What about PMI?+
Not modeled. Put less than 20% down and your lender will add private mortgage insurance (typically 0.5–1.5% of loan per year) until you reach 20% equity. Add it to the buyer side mentally if you’re doing a low-down-payment scenario.
Why does buying still win at high rates?+
Because rent grows too. Even with expensive debt, a home locks in today’s housing cost (minus rate changes on refinance) while rent continues compounding. Over long horizons (15+ years) with typical rent-growth assumptions, the renter’s payments balloon while the buyer’s stay flat in real terms.
Does the URL update so I can share?+
Yes. As you type, the URL updates to /rent-vs-buy/500000-20-7-2500-10 (price-down%-rate-rent-years). Copy the URL bar or use the SHARE button.
§ 04 / TOOLS
Related calculators.
§ 05 / READING