Compare owning a home with renting and investing the difference, with a break-even point and a year-by-year table. Runs on your device.
Buying beats renting when the net worth you would have after selling the home is higher than the net worth you would have after renting and investing the money you did not spend on the house. The page runs both paths month by month for up to 50 years. The buyer pays the down payment and buying costs, then the loan payment, property tax, maintenance, insurance and any HOA fee. The renter pays rent, raised once a year, and invests the down payment and buying costs. In any month, whoever pays less invests the difference at the investment return. Net worth for the buyer is the home value after selling costs, minus the loan left, plus any savings. For the renter it is the investment account.
The page opens on a 400,000 home with 20% down at 6.5% over 30 years, property tax and maintenance of 1% of value each, insurance of 1,200 a year, buying costs of 3% and selling costs of 6%. Value rises 3% a year, investments return 6% and rent is 2,200 a month, rising 3% a year. Month 1 costs 2,789.28 to own, made of the 2,022.62 loan payment, 333.33 tax, 333.33 maintenance and 100.00 insurance. After 10 years buying leaves 234,028.95 and renting 228,050.18, so buying is ahead by 5,978.78, and the break-even point is 9 years 2 months. After 5 years the order is the other way: renting is ahead by 21,533.10. At a rent of 2,600 the break-even moves to 4 years 4 months, and at 1,800 it is not reached within 50 years.
The page shows two ways to count. Net worth is the one that decides the winner, because it includes what the invested money would have earned. Net cost is simpler: for buying, the down payment, the buying costs and every owning payment, minus the money you get back when you sell (sale price after selling costs, minus the loan left); for renting, all the rent paid. On the opening example the 10-year net cost of buying is 204,396.20 and of renting 302,646.41. Net cost on its own favours buying here, but it ignores that renting leaves your down payment working for you, so read the net worth lines for the verdict. The break-even point is the first month when buying leaves you with at least as much as renting.
The home value and the rent change by a fixed percentage each year, and real markets do not. Property tax and maintenance follow the home's value at the start of each year, while insurance and HOA fees stay flat. There is no income tax, mortgage interest relief, tax on investment gains or tax on the sale, and no rules for any country. Buying and selling costs are inputs because they differ by country and deal. Moving costs, repairs larger than the maintenance percentage and the value of living where you like are not counted. Nothing you type is stored or sent. This is an estimate, not financial advice.
Compare the net worth of each path after the years you expect to stay. On the opening example, buying is ahead by 5,978.78 after 10 years (234,028.95 against 228,050.18), while renting is ahead by 21,533.10 after 5 years. Change the years and the rent to see where your own case switches.
It is the first month when buying leaves you with at least as much money as renting, after selling costs. The opening example reaches it after 9 years 2 months. If staying that long is unlikely, renting came out ahead for the shorter stay.
A renter keeps the down payment and buying costs, 92,000 in the example, and can invest them. Leaving that out would treat the money as free. At 6% a year, 92,000 grows to 164,757.99 in 10 years, and the renter also invests any month the rent is below the cost of owning.
The loan payment, property tax and maintenance as a percent of value, insurance, and an optional HOA fee. With 1% tax and 1% maintenance on a 400,000 home, each adds 333.33 a month in year 1. Costs that are not in these boxes, such as repairs beyond the maintenance percent, are not counted.
No. It has no income tax, capital gains tax, transfer duty or interest relief, because the rules differ by country and by year. Put the cost of buying into the Buying costs box. This is an estimate, not financial advice.
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