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Buying

Rent vs buy

Over the years you would actually stay, which one costs less?

Illustrative example only — not a rate quote, not an APR offer, and not a commitment to lend.

Your inputs

Charged on the home's value each year, so it grows with appreciation.

Roof, furnace, sewer line, paint. One percent a year is a common rule and an unreliable one.

Commission, title, transfer taxes, the repairs a buyer asks for.

A guess, compounded. It can be negative.

For somewhere you would actually be willing to live instead.

This is the input that moves the answer most. Be honest with it.

How long you would really stay — not how long the loan runs.

Buying pulls ahead in

Year 13

That is the first year the net cost of owning falls below the net cost of renting, counting the cash the renter would have invested instead of putting it down. Move earlier and renting was the cheaper choice.An illustration produced by the inputs on this page — not advice, not a quote, not a commitment to lend.

$248,891Net cost of buyingEverything paid out over 15 years, less the equity left after selling costs.
$345,587Net cost of rentingRent paid over the same years, less the portfolio the down payment grew into.
$96,697Difference at the endIn favor of buying, on these assumptions.
Year 13CrossoverOn these assumptions, buying stops being the more expensive option in year 13. Sell before then and renting was cheaper.

Net cost, year by year

Both lines are cumulative cost with the asset netted off: for the buyer, everything paid out less the equity a sale that year would release; for the renter, all the rent paid less the portfolio their un-spent down payment grew into. Where the lines cross is the whole answer, and the dashed marker names the year.

Net cost of buying (solid) Net cost of renting (dashed)

Value, equity and what is still owed

The second chart is home value against equity and remaining balance rather than a stack of cumulative costs — cumulative costs would only redraw the table below, whereas this explains why the buying line bends the way it does. Equity is what a sale that year would actually put in your hand: value, minus the balance, minus the cost of selling. Early on the selling cost alone can be larger than everything you have repaid, which is the real reason a short hold favors renting.

Home value (solid) Equity after selling costs (long dash) Balance still owed (short dash)

The same comparison, year by year, in numbers

Nothing in the charts above is unavailable here. The table scrolls sideways inside its own box, so the page never does.

Every year of the held period. "Net cost" is everything paid out, less what you would walk away with at the end of that year — equity after selling costs for the buyer, the invested portfolio for the renter. Illustrative figures produced by the inputs above.
YearCash out, buyingCash out, rentingEquity if soldRenter's portfolioNet cost, buyingNet cost, rentingAhead
Year 1 $142,915 $34,800 $75,405 $112,928 $67,510 -$78,128 Renting
Year 2 $189,935 $70,818 $102,488 $129,576 $87,447 -$58,758 Renting
Year 3 $237,323 $108,097 $130,804 $146,164 $106,519 -$38,068 Renting
Year 4 $285,095 $146,680 $160,413 $162,661 $124,682 -$15,981 Renting
Year 5 $333,266 $186,614 $191,378 $179,031 $141,888 $7,583 Renting
Year 6 $381,852 $227,945 $223,764 $195,237 $158,088 $32,708 Renting
Year 7 $430,869 $270,723 $257,641 $211,238 $173,229 $59,485 Renting
Year 8 $480,335 $314,999 $293,080 $226,991 $187,255 $88,008 Renting
Year 9 $530,268 $360,824 $330,159 $242,448 $200,109 $118,375 Renting
Year 10 $580,686 $408,252 $368,958 $257,560 $211,728 $150,692 Renting
Year 11 $631,609 $457,341 $409,561 $272,272 $222,048 $185,069 Renting
Year 12 $683,057 $508,148 $452,058 $286,527 $230,999 $221,622 Renting
Year 13 $735,051 $560,733 $496,543 $300,261 $238,508 $260,472 Buying
Year 14 $787,612 $615,159 $543,113 $313,410 $244,499 $301,749 Buying
Year 15 $840,764 $671,490 $591,874 $325,902 $248,891 $345,587 Buying

What this page assumes

This is the calculator most often used to justify a conclusion someone already reached. It has fifteen inputs and most of them are guesses about the future, so it can be made to say almost anything. The honest way to use it is to move one assumption at a time and watch how far the answer travels.

  • The return on the renter's cash is the assumption that moves the answer most. The down payment and closing costs are treated as invested from day one, compounding at whatever rate you typed, and every dollar by which owning costs more than renting is added to that pot. Change that one percentage by two points and the crossover year can move by five or disappear entirely. If you take nothing else from this page, take that.
  • Appreciation is the second most powerful input, and it is a guess compounded over the whole period. It can be negative. Real house prices fall for years at a time, and a national average is not your street.
  • The renter is assumed to actually invest the difference, every year, without touching it. Very few people do. If the money is spent instead, renting looks far worse than this page shows.
  • Nothing here is adjusted for tax. No mortgage-interest deduction, no capital-gains exclusion on a primary residence, no tax on the renter's investment gains. All three are real, they push in different directions, and they depend on circumstances a calculator cannot see.
  • Maintenance is a flat percentage of the home's value each year. Real maintenance is lumpy: nothing for four years, then a roof.
  • Property tax is a flat percentage of the home's value and rises with it. Real assessment and levy rules — Colorado's included — do not work that way.
  • Rent grows at a constant rate, and the rented home is assumed comparable to the bought one. Renting also carries costs this page ignores: renter's insurance, and moving whenever a lease ends badly.
  • Selling costs are charged only in the year you sell, and equity is shown net of them in every year so the comparison stays honest about the cost of leaving.
  • No cost of an unexpected move, no vacancy, no special assessment, no insurance repricing, no HOA increase, no refinance, and no change in the mortgage rate.
  • Owning and renting differ in ways that are not money: security of tenure, the freedom to change a house, the freedom to leave one. This page prices none of that, and for many people it decides the question.
  • Every figure on this page is an illustration produced by your inputs. This site is a demonstration for a fictional lender that cannot lend, and nothing here is financial advice.

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Talk it through

Send the numbers to a person

On a live site this is where the arithmetic on the rent vs buy calculator turns into a conversation. A loan officer would get what you enter here, along with the inputs already in the link.

This form is a demonstration and does not send anything. There is no server, no database and no third-party form service behind this page. Nothing you type is stored, transmitted or logged, and nobody will call you. If you want to see how the real thing would behave, fill it in — it validates properly and shows the confirmation.

A real enquiry would go to (720) 555-0139 or[email protected] — both invented for this demonstration.