How it works
A fair, transparent comparison
We simulate both paths month by month, using the same money, so neither side gets a head start.
Mortgage
Monthly principal and interest use the standard fixed-rate amortization formula. We track your loan balance month by month.
Ownership costs
Property tax is a percentage of the home's current value. Insurance and maintenance grow with home value. HOA dues stay flat.
Buying side
If you sell at the end, you get the home's value, minus selling costs, minus what you still owe on the loan. Principal you paid shows up here once, as equity.
Renting side
The renter keeps the down payment and closing costs and invests them. Each month, whoever pays less invests the difference, so both sides spend the same total.
Comparison
We compare buyer net worth (sale proceeds plus any invested savings) with the renter's portfolio in the same year. Break-even is the first year from which buying stays ahead of (or tied with) renting through the end of your time frame.
Limitations
Not modeled: PMI, taxes on gains, mortgage interest deductions, refinancing, and market volatility. Returns and appreciation are smooth averages you choose — not forecasts.
Key terms
- Cash outflow
- Every dollar you pay out: down payment, closing costs, and monthly housing costs (or rent).
- Total cost
- Cash outflow minus what you get back when you sell. For renters, it's simply rent and insurance paid.
- Net worth
- What you'd have at the end: for buyers, sale proceeds after the loan and selling costs; for renters, their investment portfolio.
- Break-even
- The first year from which buying's net worth stays ahead of (or tied with) renting's through the end of your time frame — a brief lead that later reverses doesn't count. If it never does within your time frame, we say so.
Why we don't double-count
Principal you pay down is not counted as a cost and also as savings. It's part of your monthly payment (cash out) and returns to you only through sale proceeds at the end. Likewise, the renter only invests money the buyer actually spent — never the same dollar twice.