Compare the long-term financial impact of renting versus buying a home with appreciation, tax benefits, and opportunity cost analysis.
Renters and buyers pay for the same thing, a home, but the money flows into different ledgers that compound for years. This tool builds both ledgers from one set of assumptions: buying spends on a down payment, closing costs, mortgage principal and interest, property tax, insurance, and maintenance; renting spends on rent and invests the money it did not spend. Appreciation, rent growth, and the forgone return on the down payment are projected year by year. The surprise is that the answer is usually a break-even year, often five to ten years out, sometimes never.
A concrete input and expected output from the current implementation.
Input
Home price $400,000; 20% down payment ($80,000); 30-year fixed mortgage at 6.5%; property tax 1.2% of value; homeowners insurance $150/month; maintenance 1% of value per year; closing costs 3% ($12,000); rent $1,900/month with no rent growth; investment return 7%; 10-year horizon.
Expected output
Buying costs $2,906/month all-in: $2,023 mortgage, $400 property tax, $150 insurance, $333 maintenance. After 10 years the home is worth about $537,600, the mortgage balance about $271,300, and equity about $266,300; net after all buying costs about -$174,400. Renting costs $1,900/month, and the $80,000 down payment plus the $1,006/month surplus, invested at 7%, grows to about $331,500 against $228,000 of rent, net about -$97,200. Renting finishes about $77,000 ahead, no break-even year inside 10 years.
At 6.5%, the first decade of this mortgage is roughly 80% interest, and the renter's invested down payment plus monthly surplus grows faster than the buyer's equity once taxes, insurance, maintenance, and closing costs are subtracted. Renting wins until appreciation and principal paydown outrun the invested surplus.
Both paths start from the same facts: price, down payment, mortgage rate, holding period. The buy path charges the down payment, closing costs, and monthly mortgage, tax, insurance, and maintenance; the rent path charges rent and invests the down payment plus any monthly surplus at the assumed return. Principal repaid counts as savings, not cost: it stays in the home as equity.
The headline result is the first year the buy path's cumulative net worth overtakes the rent path's, or that it never does within the horizon. Three inputs you supply drive the verdict: appreciation, rent growth, and investment return. The tool recomputes the comparison across them, and moving any one by a point typically shifts the break-even year by years.
The first year the buy path's net worth, home equity minus everything spent on the house, reaches the rent path's, investments minus rent paid. Before it, renting has left you wealthier; after it, buying has. If the gap never closes within your horizon, the tool reports that buying never breaks even under your assumptions.
Because a mortgage payment is not the whole cost. Your down payment and closing costs no longer earn the investment return you entered, you pay property tax, insurance, and maintenance the landlord currently covers, and the early years of a high-rate loan are mostly interest. The rent path is rent plus investing the difference, and that combination often wins for a decade or more.
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