PFCHow to use this calculator
Renting and buying affect wealth in different ways. A payment-only comparison can miss home equity, transaction costs, and the return available on money that is not used for a down payment. This calculator compares both paths using the same starting capital.
- Enter the home price, down payment, mortgage terms, rent, and expected time in the home.
- Review the property costs, closing costs, rent growth, appreciation, and investment-return assumptions.
- Compare ending wealth after selling the home and repaying the mortgage. Try different assumptions to see how sensitive the result is.
Illustrative example
With the displayed assumptions for a $400,000.00 home and $2,200.00 monthly rent, projected wealth after 10 years is $234,029.32 for buying and $223,228.38 for renting. Change costs and returns to compare a different scenario.
These example values are for explanation. They are not current market quotes or personalized recommendations.
Calculation method
Buying wealth equals the home sale proceeds after selling costs and mortgage repayment, plus the buyer’s investment account. Renting wealth equals the renter’s investment account. The renter initially invests the down payment and buying closing costs; whichever path has lower monthly cash costs invests that difference.
Assumptions and limitations
Both paths start with capital equal to the down payment plus buying closing costs. The renter invests it; each path invests its monthly cost advantage at the selected after-tax return. Buying wealth includes the home sale proceeds after selling costs and the remaining loan, plus invested savings. Rent changes annually; home value and investments compound monthly. Property tax and maintenance follow home value. Insurance and HOA rise annually. PMI is modeled until the loan reaches 80% of the original purchase price, not the lender’s actual cancellation rules. The mortgage is fixed rate. No tax deductions, home-sale tax, rent deposit, moving costs, or refinancing are modeled. Different assumptions can reverse the result.
Rent versus buy calculator FAQs
Choose a question to read the answer, then try your own numbers in the free calculator.
How does the rent versus buy calculator compare the options?
It compares projected wealth after the chosen number of years. The buying path includes home equity after sale costs and mortgage repayment; the renting path includes invested upfront savings. Both paths invest any modeled monthly cost advantage.
Why does the number of years matter when comparing renting and buying?
The time horizon changes how long rent, ownership expenses, mortgage payments, appreciation, and investment growth accumulate. Upfront purchase and later sale costs also affect the comparison. Try several durations to see whether the modeled advantage changes.
Does the result mean I should buy or rent?
It shows which path produces more wealth under the inputs you selected. It does not capture personal flexibility, job plans, neighborhood preferences, or uncertain future returns.
Does it include home-sale tax or mortgage deductions?
No. It excludes those tax effects. The investment return input should reflect the after-tax return you want to model.
What happens after the mortgage is paid off?
Mortgage principal and interest payments stop, while modeled ownership costs such as maintenance, taxes, insurance, and HOA dues continue.
PFC provides mathematical planning estimates. Tax and retirement rules in these tools are for 2026 and do not update automatically. Check the cited sources and the terms that apply to your situation.