How Rent vs Buy Math Works
Renting's cost is simple: monthly rent growing yearly, gone forever. Buying's cost is subtler: down payment plus monthly P&I, tax, insurance and HOA, minus the equity you keep (appreciated home value less remaining loan). Buying looks expensive until equity is subtracted; renting looks cheap until growth compounds. The honest comparison is total rent paid vs buy outlay minus equity over the same stay.
Net buy cost = Down + Σ(P&I + Tax + Ins + HOA) − (Future value − Loan left)
5% rule: yearly unrecovered buying cost ≈ 5% of home value
Worked Example
Scenario: $2,200 rent at 3% growth vs $450k home, $90k down, 6.5%/30yr, 3% appreciation, 7-year stay
Total Rent Paid
~$200,000
Buy Outlay
~$290,000
Equity Built
~$190,000
Winner
BUY by ~$100,000
Short stays under ~5 years usually favor renting (closing costs + slow early equity); long stays let appreciation and principal paydown dominate.
What the Calculator Shows
- Total rent cost, rent with annual growth over your stay
- Buy outlay, down payment plus all monthly ownership costs
- Equity built, appreciated value minus remaining mortgage
- Net buy cost, outlay minus equity, directly comparable to rent
- Winner + margin, rent or buy with dollar difference
Decide With Confidence
Test sensitivity: raise rent growth to 5% or cut your stay to 3 years and watch the winner flip. Get your exact monthly payment from our Mortgage Calculator, then track resulting equity in our Net Worth Calculator.