Rent vs Buy Calculator
Net worth from renting vs buying, year by year, and when buying wins.
Use via API
Compare buying a home with renting and investing the difference, year by year: net worth of each, the break-even year and who is ahead at the end. Ignores taxes on gains, tax relief and PMI. Send JSON, get JSON back.
POST https://pithlab.com/api/v1/tools/rent-vs-buy-calculator
curl https://pithlab.com/api/v1/tools/rent-vs-buy-calculator \
-H "Authorization: Bearer $PITHLAB_KEY" \
-H "Content-Type: application/json" \
-d '{"price":400000,"downPayment":80000,"rate":6,"termYears":30,"taxPercent":1,"insurance":1200,"rent":1800,"years":10}'About the Rent vs Buy Calculator
Compare renting and buying a home over time: mortgage, tax, maintenance, appreciation and investing the difference, with net worth by year and the break-even year.
How to use the Rent vs Buy Calculator
- Enter the home price, down payment, mortgage rate and term, and the yearly costs of owning: property tax, maintenance and insurance.
- Enter your rent, how fast rent and home prices rise, buying and selling costs, and the return you'd earn investing spare money.
- Compare buyer and renter net worth each year and find the year buying breaks even, if it does.
Examples
Input
400000, 80000 down, 6.5%, 30 years, 1.1% tax, 1% maintenance, 1,500 insurance, 3% growth, 3% buy / 6% sell costs, rent 2000 +3%, 6% return
Output
After 10 years renting is ahead by 38,012.45 (buyer 234,028.95, renter 272,041.40); buying doesn't break even within 10 years
Input
Same as above, 30 years
Output
After 30 years buying is ahead by 71,247.33 (buyer 997,065.67, renter 925,818.34); buying breaks even in year 23
Frequently asked questions
How does the model work?
The buyer pays the down payment and buying costs up front; the renter invests that same amount instead. Each year the buyer pays the mortgage, property tax and maintenance (as % of the home's current value) and insurance, while the renter pays rent. Whoever spent less that year invests the difference at year end, and both portfolios grow at the investment return. Rent and the home's value rise once a year.
How is net worth calculated?
Buyer: the home's value minus selling costs, minus the mortgage still owed, plus their investments. Renter: their investments. The break-even year is the first year the buyer's net worth is at least the renter's.
What does it leave out?
Taxes on investment gains or a home sale, mortgage interest relief, mortgage insurance (PMI), renters insurance, moving costs and rate changes. It also assumes returns and price growth are steady, which they never are. Use it to see which assumptions matter, not as a forecast.
Why does buying often lose in the first few years?
Buying and selling costs are paid at the start and end, and early mortgage payments are mostly interest. Owning tends to win only if you stay long enough for appreciation and paying down the loan to outweigh them.