Rent vs Buy Analyzer

Apples-to-apples wealth comparison: who comes out ahead after N years — the buyer (with home equity) or the renter (investing the down payment)?

📖 About this tool

What it does

Apples-to-apples wealth comparison between buying a home and renting an equivalent unit while investing the down payment. Models all the carrying costs (property tax, insurance, PMI, maintenance, HOA), home appreciation, and selling costs at the horizon.

Who this helps

Anyone weighing a major housing decision — first-time buyer, considering a move, or comparing a stay-and-rent vs upgrade-and-buy choice.

How to use it

  1. Enter the home price, down payment %, mortgage rate + term, and closing costs.
  2. Enter property tax %, maintenance %, home insurance, HOA, and PMI rate.
  3. Enter rent + annual rent increase + renter's insurance.
  4. Set home appreciation %, investment return % on the renter's invested down payment, and the holding-period horizon.
  5. Read the break-even year (when buyer wealth crosses renter wealth) and the verdict.

What it doesn't do

Doesn't model mortgage interest deduction (most don't itemize post-TCJA). Doesn't model capital gains on home sale (Section 121 exclusion handles up to \$250K/\$500K). Doesn't model capital gains on the renter's investments.

Inputs

The Home You'd Buy

PMI is auto-applied when down payment is under 20%, and dropped when the loan balance falls to 78% of the original home value (per the Homeowners Protection Act).

The Equivalent Rental

Market Assumptions

Selling costs are real-estate commission + closing fees on the sale; assumed to apply when measuring the buyer's net wealth at the horizon. Investment return is what the renter earns on the down payment + closing they didn't spend.

Wealth Comparison

Net Wealth Over Time — Lines Crossing = Break-Even
Annual Buyer Costs (Stacked) vs Annual Rent
Year-by-Year
Year Home Value Loan Balance Buy Monthly Rent Monthly Buyer Wealth Renter Wealth Buyer Advantage