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Rent vs. buy — decided

The real question isn't renting vs. a mortgage payment — it's buying vs. renting and investing the difference. This compares your wealth either way at the year you'd move on, and tells you which wins and when it flips.

By the SterlingCat editorial team · Last updated 2026-07-20 · Method verified against reference cases (how we calculate)

The key points

  • Buying wins sooner the longer you stay, the faster homes appreciate, and the more rent rises.
  • Renting wins when your down payment could earn more invested, or you'll move within a few years and pay transaction costs twice.
  • Below, the verdict is conditional: change any assumption and watch the answer — and the year it flips — change with it.
Decision guideRent vs. Buy: When Does Buying Actually Win?

Your details

Save your figures here to reuse them across the calculators and switch between scenarios. They stay in this browser — never sent anywhere — and you can export or clear them anytime.

The home

The purchase price you're weighing.

$

The share of the home price you pay up front.

% down

A rough guess is fine — a lender or rate site has today's.

%
How long a mortgage?
Renting instead

Monthly rent for a comparable home.

$

Your assumption for annual rent increases.

% a year
How long you'll stay

The single biggest driver — buying needs time to beat renting.

years
Costs of owning We'll use typical figures — adjust any you know.
% a year
$
$
% a year
%
%
Growth you're assuming Your assumptions, not our forecast.
% a year
% a year
US tax benefit Only if you itemize — most people take the standard deduction.
%

With your numbers

—

Buy —
Rent & invest the difference —

Your wealth over time, either way

Buy Rent & invest Your horizon

Recommendation

—

Which scenarios?

A scenario projection based on stated assumptions — not a forecast or guarantee.

How we calculate this

We run your numbers month by month over your horizon and compare whole-balance-sheet wealth: the buyer's home equity (net of selling costs) plus any investments, against the renter's investment balance. Both start from the same money and the same monthly housing budget — whoever spends less each month invests the difference, so the comparison is fair.

The mortgage payment

Monthly principal & interest use the standard amortization formula:

M=P ⁢ r(1+r)n (1+r)n−1
M
monthly payment
P
loan amount (price − down payment)
r
monthly rate (annual ÷ 12)
n
number of payments (years × 12)

In your numbers: a — loan at — over — years works out to — a month. Payments stop the month the loan is paid off — they never accrue past the term.

What's included, and what isn't

Included: amortization, property tax (with an optional assessment cap), insurance, HOA, maintenance, PMI while you're under 20% equity, closing and selling costs, home appreciation, rent growth, and the opportunity cost of invested capital. US mortgage-interest and property-tax itemizing is modeled when you supply your marginal rate and standard deduction, with the property-tax deduction capped at the SALT limit.

Declared omissions (so the tool's claims stay honest): adjustable rates and refinancing, the $750k mortgage-interest limit, the SALT cap's high-income phasedown and its scheduled 2030 drop back to $10,000 (the current cap is held for every year), the primary-residence capital-gains exclusion and investment-side taxes, AMT, and lumpy maintenance. Expected appreciation and investment returns are your assumptions, not our forecasts — which is why the recommendation is conditional and shows what would flip it.

Full protocol: computational inventory, reference cases, and accounting identities in the project's V&V record. The recommendation is a separate step from the numbers — a scoped outcome claim only when one option wins every scenario we test around your inputs, otherwise an explicit "it depends."

Terms, in plain words

Opportunity cost
What your down payment and monthly savings could have earned if you'd invested them instead of putting them into a house.
Equity
The part of the home you actually own — its value minus what you still owe and minus the cost of selling.
PMI
Private mortgage insurance — an extra monthly charge lenders add when your down payment is under 20%, until you reach 20% equity.
SALT cap
The yearly limit on deducting state and local taxes (including property tax) on your US federal return — $40,400 for 2026 (the 2025 tax law raised it from the earlier $10,000 cap).
Amortization
How a fixed mortgage payment splits between interest and principal over time — mostly interest early on, mostly principal near the end.

A sensible next step

Whatever the verdict, the highest-value move is usually to pin down the one number that drives it most: how long you'll really stay. Try your honest low and high, and see whether the answer holds.

Common questions

Why does renting "win" even when I'd build equity?

Because the fair comparison isn't equity vs. nothing — it's equity vs. investing the down payment, the closing costs, and any monthly savings. When markets do well or you move soon, that invested money can beat the equity, net of the costs of buying and selling.

Do you store what I enter?

No. Everything is computed in your browser. Nothing you type is sent to us or saved — there are no accounts and no tracking of your inputs.

Is this financial advice?

No. It's a model based on the numbers you enter — a scenario projection based on stated assumptions, not a forecast or guarantee, and not financial, legal, or tax advice.

Sources

Grounded in authoritative primary sources:

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