About the Home: Buy vs Rent Calculator

Deciding whether to buy a home or continue renting is one of the most significant financial decisions most people will ever make. The right answer depends on dozens of interacting variables — mortgage rates, local property values, how long you plan to stay, what you could earn by investing your down payment elsewhere, and much more. This calculator models all of those factors together so you can see the full picture, not just the monthly payment comparison.

How the calculation works

The calculator runs a year-by-year simulation over your chosen time horizon. For the buyer, it tracks mortgage principal and interest payments, property taxes, home insurance, HOA fees, maintenance costs, and the gradual build-up of home equity through both principal repayment and price appreciation. For the renter, it tracks monthly rent (growing at your specified annual rate) and — crucially — models the wealth that accumulates when the down payment and monthly cost savings are invested in a diversified portfolio instead.

The break-even year shown on the chart is the point at which the buyer's cumulative net worth overtakes the renter's. Before that point, renting and investing the difference is the financially superior choice; after it, buying wins.

Key factors that shift the result

• Time horizon: Buying has high upfront costs (closing costs, down payment opportunity cost). The longer you stay, the more those costs are amortised and the more equity you accumulate.
• Mortgage rate: Even a 1% difference in interest rate can shift the break-even point by several years and change the 30-year outcome by tens of thousands.
• Home appreciation rate: Property values vary enormously by city and country. Using your local historical average gives a more realistic result than a global default.
• Investment return rate: The renter's advantage depends heavily on whether they actually invest the difference. If the down payment and monthly savings sit in a low-yield savings account, buying looks much better.
• Rent increase rate: Rising rents erode the renter's monthly advantage over time, which is why long-term renting in high-inflation markets often loses to buying.

Common mistakes when comparing buying vs renting

• Ignoring the opportunity cost of the down payment — that money could be growing in the stock market.
• Forgetting ongoing ownership costs like maintenance (typically 1–2% of home value per year), property taxes, and insurance.
• Assuming home prices always go up — real estate is cyclical and varies significantly by location.
• Comparing mortgage payment to rent directly, without accounting for the portion of the mortgage that goes to interest (not equity).
• Not accounting for selling costs (estate agent fees, legal costs) when you eventually move — typically 5–8% of the sale price.

When does buying make more sense?

Buying tends to win when you plan to stay in one place for 7+ years, when mortgage rates are low relative to local rent levels, when local property markets have strong historical appreciation, and when you value the stability and personalisation that ownership provides. It also forces a form of disciplined saving that many people benefit from.

When does renting make more sense?

Renting tends to win in high price-to-rent ratio markets (where home prices are very high relative to rents), when you have career or lifestyle flexibility that requires mobility, when mortgage rates are elevated, or when you have high-return investment opportunities for your capital. In many expensive global cities, renting and investing the difference outperforms buying for the first 10–15 years or longer.