Debt & home
Rent vs buy calculator
“Buying is saving” and “renting is burning money” are both too crude. Put the same cash flow down both paths and see which year buying pulls ahead — if it ever does.
Break-even year
year 8
At exit:+47,950.88 buying ahead at exit
Sale equity at exit
1,281,294.02
Renter’s fund at exit
1,233,343.15
Monthly P&I
6,365.03
Loan remaining at exit
1,087,832.88
Buying pulls ahead in year 8; at exit it's 47,950.88 ahead.
Year-by-year: sale equity vs renter’s fund
| Year | Buy: cash out | Rent: cash out | Sale equity | Renter’s fund | Buy lead |
|---|---|---|---|---|---|
| 1 | 740,198.42 | 72,784.79 | 605,571.06 | 693,999.96 | -88,428.90 |
| 2 | 840,804.92 | 147,038.69 | 672,899.23 | 749,119.34 | -76,220.11 |
| 3 | 941,827.74 | 222,791.35 | 742,035.83 | 805,381.93 | -63,346.10 |
| 4 | 1,043,275.30 | 300,073.04 | 813,033.82 | 862,812.05 | -49,778.23 |
| 5 | 1,145,156.15 | 378,914.61 | 885,947.82 | 921,434.58 | -35,486.75 |
| 6 | 1,247,479.05 | 459,347.54 | 960,834.19 | 981,274.93 | -20,440.73 |
| 7 | 1,350,252.92 | 541,403.96 | 1,037,751.06 | 1,042,359.09 | -4,608.03 |
| 8 | 1,453,486.86 | 625,116.64 | 1,116,758.40 | 1,104,713.63 | 12,044.77 |
| 9 | 1,557,190.16 | 710,519.00 | 1,197,918.11 | 1,168,365.73 | 29,552.38 |
| 10 | 1,661,372.29 | 797,645.16 | 1,281,294.02 | 1,233,343.15 | 47,950.88 |
Buy lead = sale equity − renter’s fund. Positive rows (highlighted) mean buying is ahead that year.
Same-outlay net cost (consistent definition)
| Path | Net cost |
|---|---|
| Buy: total outlay − terminal equity | 380,078.26 |
| Rent: same outlay − terminal fund | 428,029.14 |
Both paths spend the same cash flow; the renter invests what is not spent. Principal is counted once — leaving as cash, returning through equity.
Detail
| Item | Amount |
|---|---|
| Upfront: down + buy costs | 640,000 |
| Loan | 1,400,000 |
| Total loan interest | 451,637.07 |
| Total rent paid | 797,645.16 |
| Home value at exit | 2,442,398.87 |
How the two paths are compared fairly
Buy path: the down payment plus buying costs go out upfront; each month you pay P&I, maintenance and other housing costs; at the end you sell and keep price×(1−sell cost) − the remaining loan. Rent path: the same upfront amount is invested at your assumed return, and every month the difference (buying outlay − that month's rent) is added — negative when renting costs more.
The key is no double counting: the principal inside each payment leaves as cash but returns through sale equity — counted once. So the endpoint compares sale equity to the renter's invested fund, rather than treating principal as pure expense and deducting it again.
Growth figures are assumptions, not forecasts
Home appreciation, rent growth and the investment return are all editable scenario assumptions — nobody knows the future values. The defaults are illustrative only; try several sets (flat prices, faster rents, lower returns) and see which assumption the verdict is most sensitive to.
The break-even mark is checked only at each full year. If sale equity never catches up at those year-ends, the page says there is no cross-over and does not invent one. A fractional horizon is judged at the exit you typed, which can differ from the last full year: if buying is already ahead then, the sentence says so and does not call it a renter win.
Frequently asked
Why isn't principal a pure cost of buying?
Principal does leave as cash each month, but it comes back through equity at sale — counting it again in net cost would be double counting. Interest, tax, maintenance and transaction costs are the true expenses.
What exactly is 'ending net worth'?
Buy side = sale equity at exit (price×(1−sell cost) − remaining loan); rent side = the investment fund (seeded with down + buying costs, adjusted monthly by the outlay difference, compounded at the assumed return). The gap is how far buying is ahead — negative means renting wins.
What happens after the loan is paid off?
If the stay outlives the mortgage term, the buyer's monthly outlay drops to maintenance plus other housing costs while the renter still pays rent — that difference keeps feeding the fund comparison. Long horizons are exactly when buying usually turns the corner.
Is 'no break-even' a bug?
No. It means buying never pulled ahead at a full year-end. On a fractional horizon, also read the exit lead: if buying is already ahead then, the sentence says so instead of calling it a renter win.
Month-by-month simulation at monthly compounding, all local. Growth and return figures are editable scenario assumptions, not forecasts; tax deductions, renovation and depreciation are not modelled. Estimates only, not purchase or investment advice.