Buy vs. Rent

The buy side runs a monthly amortization loop from year 1 through your modeled horizon. Each year it tracks your remaining mortgage balance, the portion of payments going to principal vs. interest, home value growth (compounded at your appreciation rate), property taxes and insurance (as a percentage of home value), plus fixed HOA and maintenance costs. Closing costs are counted as an upfront expense in year one. The result is your equity (home value minus remaining balance) minus all cumulative costs paid.

The rent side is built around opportunity cost. Your down payment is invested from day one and compounds at your assumed investment return rate. Each month, any cost difference between renting and owning (rent vs. mortgage + taxes + insurance + HOA) is also invested. This "invest the difference" model is what makes the comparison fair, as it acknowledges that renters don't just spend the money they're not putting toward a house.

Both paths produce a net worth number each year. Buy net worth is home equity minus cumulative sunk costs. Rent net worth is the total invested portfolio. The calculator scans for the first year where buy net worth exceeds rent net worth. That's your break-even year. If it never crosses within your horizon, renting wins over that time frame.

The advanced assumptions panel lets you adjust home appreciation, investment return, and marginal tax rate (for mortgage interest deduction modeling). The defaults (3% appreciation, 7% investment return) are long-run historical averages. Your local market may behave very differently.

The break-even year tells you how long you need to stay in the home for buying to be the financially better decision. If you move before that year, renting would have left you with more money. The net worth chart shows the full trajectory. Watch for how quickly the lines converge or diverge based on your inputs. A short break-even (under 5 years) usually signals a low down payment, low closing costs, or a high-appreciation market. A long break-even (over 10 years) often means high prices relative to rent, a large required down payment, or a strong investment return assumption.

The year-by-year table lets you drill into any specific point in time. You can see exactly how much equity you've built, how much a renter would have invested, and which path is ahead at any given year. This is useful if you have a specific life event in mind, such as a likely job change, a planned move, or a retirement date.