Rent vs Buy: The Answer Is an Assumption, Not a Calculation

Buying wins by $3,700 over seven years — until you set appreciation to 0%, when it loses by $65,900. The margin IS the forecast.

A tie, and then a landslide

A $350,000 home, 20% down, 6.5%, against $2,000/month rent, over seven years:

Buying is ahead by $3,699.

On a $350,000 decision, that's a rounding error. It's a tie.

Now change one input — appreciation from 3% to 0%:

Buying loses by $65,900.

A $69,600 swing from a single assumption that nobody can forecast. That's the real finding, and it's why anyone with a confident answer to rent-versus-buy has smuggled in a prediction.

Your details

Home price($)

Deposit($)

Mortgage rate(%)

Mortgage term(yr)

How long you stay(yr)

The single most decisive input after appreciation. Transaction costs are front-loaded.

Rent($/mo)

Rent rises by(%/yr)

Home appreciation(%/yr)

NOBODY KNOWS THIS. Set it to 0 and see how much of the answer it was carrying.

Return on the deposit if invested(%/yr)

What a renter's un-spent deposit earns. Set to 0 if it would sit in a current account.

Property tax(%/yr)

Insurance(%/yr)

Maintenance(%/yr)

1% of value a year is the common rule of thumb. It arrives as a roof, not as a monthly bill.

Buying costs(%)

Selling costs(%)

Result

Buying is ahead by

$3,699.72

Over your chosen period. NEGATIVE means renting wins — this figure is deliberately signed.

Net cost of buyingEverything paid out, minus the net proceeds when you sell.: $147,427.79
Net cost of rentingAll the rent, minus the investment growth on the deposit you did not spend.: $151,127.51
Mortgage paymentPrincipal and interest only — taxes, insurance and maintenance are on top.: $1,769.79
Rent paid over the periodGrowing each year at the rate you set.: $183,899.09
Net proceeds when you sellSale price less selling costs, less what is still owed.: $151,463.02
Appreciation over the periodCompare this against the advantage figure. It is usually far larger — which is the point.: $80,455.85
Tax, insurance and maintenanceTotal over the period. The costs of owning that renting does not have.: $69,728.41
What the renter's deposit earnsGrowth on the deposit and buying costs, not spent. Leaving this out is the commonest way to rig the comparison.: $32,771.58

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What's being compared

Total cash out, minus what you get back.

Buying: deposit + closing costs + every mortgage payment + taxes, insurance and maintenance — less the net sale proceeds after selling costs and paying off the remaining balance.

Renting: all the rent paid — less the investment growth on the deposit you didn't spend.

That last part is the one people leave out

A renter isn't simply someone who failed to buy. They're holding a deposit that can be invested.

On these defaults, $80,500 of deposit and closing costs growing at 5% for seven years earns $32,772.

Leaving that out is the commonest way rent-versus-buy comparisons get quietly rigged in favour of buying — and it's usually done by accident rather than dishonestly.

If your deposit would genuinely sit in a current account earning nothing, set the return to 0. But make that an honest choice rather than an unexamined one.

Appreciation is the entire margin

At 3% a year, a $350,000 home gains $80,456 over seven years.

The advantage the calculator reports is $3,699.

So the appreciation figure is more than twenty times the size of the answer it's producing. The whole result is balanced on top of the one input nobody can forecast.

Set it to 0 and look at what happens. That's not a doom scenario — a flat seven-year window is entirely ordinary, and plenty of people have lived through one.

If you take one thing from this page, take that.

Nine percent, round trip

You pay roughly 3% to buy and 6% to sell. That's about 9% of the value gone before anything else has happened, and it's all front-loaded.

Which is why buying tends to lose over short horizons almost regardless of the market. At three years instead of seven, buying loses by $21,308 — with appreciation still running at 3%.

There simply isn't time for appreciation and principal repayment to cover the transaction costs.

Move the years input to find where your crossover sits. That crossover is the real answer to the question, far more than any single number.

Maintenance arrives as a roof

The 1% of value per year used here is the common rule of thumb — and it is a rule of thumb rather than a measurement. An older house eats considerably more; a new build eats less for a while and then catches up.

The more important thing: maintenance doesn't arrive as a smooth monthly bill. It arrives as a roof, a boiler, or a leak — in a lump, usually at a bad moment.

Budgeting it monthly is correct. Expecting to spend it monthly is not.

Does the mortgage term change things?

Less than you'd expect over a short stay, which surprises people.

A longer term lowers the monthly payment but repays less principal — so more of what you paid goes to interest and less to equity. Over seven years those two effects largely cancel in a net-cost comparison.

The term matters enormously over the full life of the loan. It matters much less to a seven-year rent-versus-buy question.

Time in the property is the input to worry about.

What isn't modelled

PMI if your deposit is under 20% — would make buying worse
Mortgage interest deduction — would make it better
HOA fees, rent controls, moving costs
Everything non-financial — which for most people are the factors that actually decide it

No calculator can price security of tenure, being allowed to keep a dog, or living somewhere you're permitted to paint the walls.

How to use this properly

As a sensitivity test, not an oracle.

Put in your real numbers. Note the answer
Set appreciation to 0%. Note it again
Set it to 5%. Note it again
Now move the years

If buying wins across all of those, buying probably wins.

If the answer flips — which it usually does — then the financial case is genuinely a coin toss, and you are free to decide on the things that actually matter to you.

That's a much better outcome than false precision.