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Put a home's price and costs next to what you pay in rent, and see the net worth each path builds year by year, and the year buying pulls ahead, if it does.
Net worth of buying against renting and investing the difference, year by year.
Percent of the price. A sample.
Percent of the home's value. Varies a lot by county.
Percent of the home's value. One percent is a common rule of thumb.
Percent of the sale price, for agents and closing. A sample.
Applied to cash the renter invests. A sample, not a forecast.
After 10 years, buying finishes ahead by
$30,533
| Year | Home value | Loan left | Buying | Renting | Buying minus renting |
|---|---|---|---|---|---|
| 00 | $400,000 | $320,000 | $56,000 | $92,000 | -$36,000 |
| 01 | $412,000 | $316,768 | $70,512 | $103,191 | -$32,680 |
| 02 | $424,360 | $313,302 | $85,597 | $114,354 | -$28,757 |
| 03 | $437,091 | $309,583 | $101,282 | $125,468 | -$24,187 |
| 04 | $450,204 | $305,595 | $117,596 | $136,514 | -$18,918 |
| 05 | $463,710 | $301,317 | $134,570 | $147,470 | -$12,900 |
| 06 | $477,621 | $296,729 | $152,235 | $158,310 | -$6,076 |
| 07break-even | $491,950 | $291,808 | $170,625 | $169,011 | $1,614 |
| 08 | $506,708 | $286,529 | $189,777 | $179,544 | $10,233 |
| 09 | $521,909 | $280,866 | $209,728 | $189,879 | $19,849 |
| 10 | $537,567 | $274,793 | $230,519 | $199,986 | $30,533 |
Net worth is what each path would hold if it ended that year, with the home sold and selling costs paid.
Buying pulls ahead in year 7
Before then, the cost of buying and the cost of selling outweigh the equity you have built. If you might move sooner than year 7, renting is the safer bet on these numbers.
The payment is not the whole cost of owning
Owning costs about $2,952 a month in year one, and only $2,135 of that is the loan payment. Renting costs about $2,415, so owning is $537 more a month at the start.
Home price growth is the biggest swing
If the home's price did not grow at all, buying would finish $85,108 behind after 10 years. Prices in one town can fall as well as rise, so treat the growth rate as a guess.
Taxes are left out on purpose
This ignores the mortgage-interest deduction, because most filers take the standard deduction and get no extra benefit from itemizing. It also ignores tax on investment gains. If you itemize, owning is somewhat cheaper than shown.
With a 20% down payment ($80,000), 3% closing costs ($12,000), a 7.03% thirty-year rate (Freddie Mac's weekly average for September 24, 2026), 1% property tax, 1% upkeep, $1,800 of insurance, 3% home price growth, and a 5% return on invested cash, the first-year cost of owning is about $2,952 a month against about $2,415 for renting. After ten years, buying leaves about $230,500 and renting leaves about $200,000, and buying pulls ahead in year 7. Cut ten years to five and renting finishes ahead, because selling costs and early interest have not yet been paid back. Every figure other than the rate is a sample, not a forecast.
Finance Quest is educational. It is not financial advice, and no calculator here knows your full situation.
The payment is only part of owning. Property tax, insurance and upkeep add hundreds a month, and none of it builds equity. The other half is the cash you put down: it could have been invested. Compare all ownership costs to rent, and count the down payment as money that could have earned a return.
No. Buying tends to win the longer you stay, because the loan gets paid down and the price can grow, while the cost of buying and selling is spread over more years. But with high prices, high rates and low rent, renting and investing the difference can finish ahead even over 20 years.
The break-even year answers this for your numbers. Many households find it lands between five and ten years, mostly because selling costs are about 6% of the price. Treat that as a starting point and change the inputs to match the place you are looking at.
Cash you put into a house cannot also sit in an investment account. The renter's version of the same cash is the fair comparison. Set the return to 0% to see the picture with no investing.
It only helps if your itemized deductions beat the standard deduction, and most filers take the standard deduction. If you itemize, the real cost of owning is somewhat lower than shown here.