Net wealth year by year: the buyer (home equity after selling costs, plus anything they invest) against the renter — flip the checkbox to see how much of the race is the investing itself.
How the comparison stays fair: both start with identical cash — the buyer spends the down payment and closing costs, the renters keep that sum. Every month, whoever pays less banks the difference: usually the renter early on, but once grown rent overtakes the owner's costs, the buyer banks the surplus by exactly the same rule — invested when the checkbox is on, held as cash when it's off, identically for both sides. Investment gains are taxed at your capital-gains rate on exit; the home sale is left untaxed (the primary-residence exclusion covers most cases — see The Fine Print).
Rent vs buy comparison with the renting savings invested in an ETF versus kept as cash — net wealth over time, breakeven years, and full costs on both sides including selling costs and capital gains tax.
Final wealth at your horizon as the ETF assumption sweeps from 0% to 14% — the buyer barely moves, the investing renter climbs, and where the lines cross is the return the market must deliver to make renting-and-investing win.
The uncomfortable truth about this calculator — and all of them: the answer is bought by the assumptions. Nudge appreciation up a point and buying pulls ahead; nudge the ETF up a point and renting does. Nobody knows either number in advance. What the tool can honestly tell you is which assumptions your decision depends on and how much room they have — that's what the tie-points above measure.
Sensitivity analysis for rent vs buy: the ETF return and home appreciation rates that tie the outcome, price-to-rent ratio, and every cost assumption adjustable in the open.
The owner's payment is mostly fixed while rent climbs — the crossing point is where the renter's cash-flow advantage ends and the buyer starts banking the difference instead.
The most misunderstood line in home economics: the principal part of a mortgage payment is not a cost — it's a forced transfer into your own equity, savings wearing a bill's costume. The true cost of owning is interest + taxes + insurance + maintenance + HOA; compare that to rent and the gap shrinks dramatically. Both framings are shown above, because both matter: cash flow is what your budget feels, true cost is what your wealth feels.
Monthly cost of owning versus renting — mortgage payment split into interest and principal, property tax, insurance, maintenance and HOA, with the cash-flow crossover point.
Home value climbing, loan balance falling — the widening wedge between them is your equity. Appreciation works on the whole value while you only put down a fraction: that's leverage, and it's the entire magic (and the entire risk) of buying.
Why short stays lose: roughly 3% to get in and 6% to get out means the house must appreciate ~9% just to return your transaction costs — typically two to three years of growth burned before year one of profit. Early mortgage payments are nearly all interest, so little equity builds at first either. Time in the house is what turns those fixed tolls into rounding errors.
Home equity over time — value growth versus loan amortization, walk-away proceeds after selling costs, and total interest paid at any horizon.
A famous shortcut says owning's unrecoverable costs run about 5% of the home's value a year — property tax, maintenance, and the cost of tying up capital. If yearly rent for the same home is less than that, renting has the edge on pure cost. Here's the shortcut next to your actual annual rent.
The disclaimer that actually matters: this is an educational model, not financial advice, and a home is never only a spreadsheet — stability, freedom to renovate, school districts, the option to move for a better job, and sleeping well all carry real value that no wealth curve captures. The math here tells you the price of each path. What each is worth to you is yours to add.
The fine print of rent vs buy — what the model includes and ignores, leverage risk, the 5% rule, why the investment return assumption dominates, and the cases where renting wins.