How to use
- Enter the home price, down payment, mortgage rate and loan term.
- Set closing, ownership and selling costs as percentages.
- Enter the monthly rent, how fast rent rises and what your investments would return.
- Read the verdict and the chart, and open the Year-by-year table for details.
Options explained
- Home price growth per year
- Long-run averages are often 2–4% a year, but prices can also fall. Try a few values.
- Ownership costs per year
- Maintenance, insurance, property tax and fees as a share of the home’s value — often 1–3% a year.
- Investment return per year
- What the renter’s savings earn. A higher return makes renting look better.
What the simulation does each month
The comparison runs month by month. The mortgage payment is fixed by the standard loan formula, and interest on the remaining balance accrues at the mortgage rate ÷ 12. Ownership costs are the home’s current value × the yearly percentage ÷ 12. Home price growth and the investment return are each converted to the monthly rate that compounds to the yearly figure, and the rent rises once a year. Whichever side spends less in a month invests the difference. The comparison length can be 1 to 50 years.
The buyer’s net worth is the home value minus the selling costs and the remaining loan, plus any money the buyer invested. The headline “Buying comes out ahead after N years” is the first year in which that figure is at least the renter’s.
With the page’s starting values (a 400,000 home, 20% down, 6.5% over 30 years, 3% price growth, 3% closing costs, 2% yearly ownership costs, 6% selling costs, 2,000 monthly rent rising 3% a year and a 6% investment return) the mortgage payment is 2,022.62 and buying pulls ahead in year 14:
| Year | Home value | Loan balance | Buy — net worth | Rent — net worth |
|---|---|---|---|---|
| 0 | 400,000 | 320,000 | 56,000 | 92,000 |
| 5 | 463,710 | 299,555 | 136,332 | 166,285 |
| 10 | 537,567 | 271,284 | 234,029 | 250,187 |
| 15 | 623,187 | 232,189 | 353,606 | 344,487 |
| 20 | 722,444 | 178,129 | 512,132 | 461,001 |
Year 0 already shows a gap because selling costs would be deducted at once and the buyer has paid closing costs.
Frequently asked questions
How does the comparison work?
Both sides start with the same money. The buyer pays the down payment and closing costs; the renter invests them. Each month, whoever spends less invests the difference. The buyer’s net worth is the home value minus selling costs and the remaining loan, plus whatever the buyer invested in months when owning cost less than renting.
Does it include taxes and subsidies?
No. Mortgage interest deductions, capital gains tax and local programmes differ by country, so the result is an estimate.
Why does the result change so much with small inputs?
Over 20 or 30 years, a 1% difference in price growth or investment return compounds into a large gap. That is normal — it shows which assumptions matter most for you.
Privacy
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