Rent vs Buy
Compare renting with buying over the years you expect to stay, and see the year buying catches up.
After 7 years
Renting comes out ahead by
With these example assumptions, renting comes out about $187,203 ahead after 7 years. Change any assumption to see your own result.
| Year | Buy | Rent |
|---|---|---|
| 1 | $212,775 | $324,026 |
| 2 | $259,287 | $385,174 |
| 3 | $307,612 | $447,453 |
| 4 | $357,833 | $510,866 |
| 5 | $410,036 | $575,420 |
| 6 | $464,313 | $641,117 |
| 7 | $520,758 | $707,961 |
| First-month cost to own | $8,535 |
|---|---|
| First-month rent | $4,500 |
| Home equity after selling costs | $520,758 |
| Net worth if you buy | $520,758 |
| Net worth if you rent | $707,961 |
| Year buying catches up | Not within 7 years |
An indicative figure for planning. Not a lender quote and not an offer of credit. Sidney Manzo, CA DRE #01108914, licensed in California.
RE/MAX Dream Properties (ASLG Inc), CA DRE #02142193
How this works
Two paths, the same spending
If you buy, the tool adds up principal and interest, property tax, insurance, HOA dues and upkeep each month, and at the end subtracts the loan balance and the costs to sell from the home's value.
If you rent, the down payment and buying costs stay invested at the return you enter. Each month, whichever choice costs less invests the difference, so both sides are compared on the same spending.
Home value growth, rent increases and the return on savings are example assumptions, not forecasts. Tax deductions, rent deposits and moving costs are left out.
Questions
How this estimate works
Why does the answer depend so much on years?
Buying has large one-time costs at the start and at the sale. The longer you stay, the more years there are to spread those costs over and to build equity.
Are the growth rates predictions?
No. They are example assumptions you can change. Try a lower and a higher figure to see how sensitive the answer is.
Does this include tax benefits?
No. Mortgage interest and property tax deductions depend on your tax situation. Ask a tax professional.