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Rent or buy a home: which leaves you wealthier?

Compare buying (with a mortgage or in cash) with renting and investing the difference. Both paths spend the same each month; whoever spends less invests what is left.

Educational simulation. Not investment advice. Results are estimates based on the data you enter and do not replace advice from a qualified professional.

Reviewed on Nov 1, 2026

Example values, in nominal terms.

The home
Buying

Fixed monthly payment (amortizing mortgage) at a fixed rate.

Renting
Investing and horizon

Return after tax of where the down payment and monthly savings would be invested.

+ Include location costs

Optional. Left blank, these costs are zero and the result is the same as above. A blank price or rent uses the main fields. Each side’s costs are added to its monthly spending; whoever spends less invests the difference.

Side A
Side B
Car and yearly increase

Monthly fuel = miles per day × days ÷ mpg × price per gallon. Check local prices.

Your inputs stay only on this browser and are not sent anywhere. Untick to delete them.

—More wealth at the end
—

Wealth on both paths

Buying: home value minus the mortgage balance, plus what was invested. Renting: everything invested.

Tap the chart to see the values.

What each path costs per month

Mortgage, insurance and upkeep of the buyer against the rent. The difference is invested by whoever spends less.

Tap the chart to see the values.

What if home prices or investments grow differently?

Who ends up with more wealth at the horizon, and by how much. Your simulation is in the center.

buying winsrenting wins· difference in money
Year by year

Next step

Take this page’s results to another calculator with the fields already filled in.

Work out the next rent increase →See the home as a rental investment →

The summary lists your inputs, results, formulas, assumptions and sources. The full report also includes the charts and interpretations, in color. In the print dialog, choose Save as PDF.

Method, assumptions and sources

Formulas

Buyer’s wealth = home value − mortgage balance + investments
Renter’s wealth = down payment + closing costs invested + monthly differences invested
Mortgage: fixed payment = balance × i ÷ [1 − (1 + i)^−n]; i = (1 + yearly rate)^(1/12) − 1
Same budget: monthly budget = higher of owning cost and rent
Location costs (optional): fuel = miles per day × days ÷ mpg × price; + tolls and parking + school and other costs; added to each side’s monthly cost and raised every 12 months

Assumptions and limits

  • Constant rates; projected or past returns do not guarantee future results. Official loan terms are those in the lender’s disclosure.
  • Nominal values. Fixed-rate mortgage; HOA fees assumed equal on both paths; property tax and upkeep paid by the buyer. Selling costs, capital gains tax and moving are not included.

Official sources and references

Frequently asked questions

Is renting throwing money away?

Not necessarily. Owners also pay costs that never come back, such as mortgage interest, property tax, insurance, maintenance and the return the down payment would earn. Which path wins depends on rates, rent and price growth.

How does the comparison work?

Both paths spend the same each month. The buyer pays the mortgage, insurance and upkeep; the renter pays rent and invests the down payment, the closing costs and any monthly difference. At the end, each path’s wealth is compared.

How do I read the default example?

A $400,000 home with $80,000 down at 6.5% for 30 years, against $2,200 rent and a 5% return: buying ends 20 years later about $335,000 ahead and pulls in front from year 3, because rent is high relative to the price (6.6% a year) and the mortgage rate is moderate. The sensitivity table shows whether the answer flips with one point more or less of price growth or return.

Where do I get each number?

Price and rent from local listings of similar homes. Closing costs and property tax from your lender’s estimate and county records. Price growth: long-run local averages, usually near inflation. Return: what your investments realistically earn after tax.

How much rent is “expensive”?

A common yardstick is the yearly rent as a share of the price. Below about 4% renting tends to be attractive; above about 6% buying tends to win. The page shows this ratio for your numbers.

What does the calculation leave out?

Selling costs, capital gains tax, moving, refinancing, mortgage interest deductions and changes in rates. It also does not measure stability or the freedom to move, which matter to the decision.

Should I talk to a professional?

Before buying, get a formal loan estimate and talk to a housing counselor or financial planner, especially about how much of your income the payment would take and how long you plan to stay.

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Rent or buy a home: how to run the numbers

“Renting is throwing money away” is only half true. Owners also have costs that never come back: mortgage interest, property tax, insurance, maintenance and the return the down payment would earn invested. The fair comparison puts both paths on the same monthly budget: whoever spends less each month invests the difference.

What makes buying win

Home prices growing faster than investment returns, rent that is high relative to the price, a low mortgage rate and a long stay in the same home. Closing costs and selling costs are paid only once, so they weigh less the longer you stay.

What makes renting win

Cheap rent relative to the price (a rent of less than about 4% of the home’s value per year), high mortgage rates, good investment returns and the discipline to really invest the difference every month. Renting also keeps you free to move.

A quick check

Compare the yearly rent with the price. A $400,000 home renting for $2,200 a month has a rent of $26,400 a year, 6.6% of the price. Owning costs the mortgage interest, property tax and upkeep, minus the price growth. When those costs, as a share of the price, are lower than the rent ratio, buying tends to win.