Free calculator · Personal Finance
Rent vs Buy
Compares the wealth each path leaves after a chosen horizon: the renter invests the down payment, closing costs, and any monthly savings at a chosen market return, while the owner builds equity net of selling costs, with property tax, insurance, maintenance, PMI, and appreciation all modeled. The result names which path is ahead, by how much, and the approximate breakeven year.
By Devon Coombs, CPA, MBA · Teaching Professor of Finance, Santa Clara University · Reviewed August 2026
Interactive Tool
Rent vs Buy
Wealthier after 8 years
Renting by $77,819
buying does not catch up within 8 years here
Renter wealth at horizon
$294,499
$103,500 invested at 7.0% + monthly differences
Owner wealth at horizon
$216,680
sale proceeds net of costs + invested differences
Net sale proceeds
$216,680
value $570,047 − 6.0% selling − loan $319,164
Cash each path consumed
$234,758 vs $318,235
all rent vs all P&I, tax, insurance, upkeep, PMI
Owner = $570,047 × (1 − 6.0%) − $319,164 + invested diffs; Renter = ($103,500 + diffs) at 7.0%/yr
Both paths spend the same total cash each month; whichever is cheaper that month invests the difference at the investment return. Out of model, and worth knowing: taxes on investment gains, any itemized mortgage-interest deduction, and rent or price jumps beyond the smooth growth rates assumed here. The verdict usually turns on the horizon, the rent-to-price ratio, and the spread between appreciation and the investment return.
Learn the concept
This calculator comes from the free Corporate Finance: The 10 Laws of Finance course, where the concept is taught with readings, worked examples, and practice questions.
Precomputed reference tables
Embed this calculator on your site
Free to embed on any site; the widget includes an attribution link back to this page.
Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.