- Buying builds equity but carries hidden costs: property tax, maintenance, insurance, and selling fees.
- Renting frees up the down payment (and any monthly cash-flow difference) to be invested instead.
- Whichever scenario projects a higher net worth at your time horizon "wins" — it's not just about monthly payment.
- Hunch tracks your actual savings, debts, and spending so you can revisit this decision with real numbers.
How the rent vs. buy calculator works
Enter the home price, your rent, and your assumptions for home appreciation, investment return, and how long you'll stay. The calculator projects net worth under both scenarios — buying (home equity minus selling costs) and renting (down payment plus any monthly savings, invested at your assumed return) — over your chosen time horizon.
The math: projected net worth, not just monthly cost
Buying scenario: home value compounds at your assumed appreciation rate; net worth is that value minus the remaining mortgage balance and estimated selling costs (typically 6-8% of sale price). Renting scenario: your down payment (plus any monthly amount you'd have spent extra on owning — taxes, maintenance, insurance, minus rent) is invested and compounds at your assumed investment return. The calculator compares the two final numbers rather than just monthly rent vs. mortgage payment, which misses the full picture.
Worked example
A $500,000 home with 20% down ($100,000), 4% appreciation, versus $2,200/month rent with the difference invested at 7% return, over 10 years: buying might net roughly $290,000 in home equity after selling costs, while renting and investing the $100,000 down payment plus monthly savings might reach roughly $310,000 — a close enough race that small changes in either assumption flip the result.
Key terms
- Home appreciation
- The rate at which a home's market value is assumed to grow each year — historically close to general inflation over long periods, though highly variable by location and period.
- Opportunity cost
- What you give up by choosing one option over another — here, the investment returns you forgo by tying up money in a down payment instead of investing it.
- Selling costs
- Realtor commissions, closing costs, and other fees paid when selling a home — typically 6-8% of the sale price, reducing the buying scenario's net proceeds.
- Carrying costs
- The ongoing costs of owning beyond the mortgage payment: property tax, insurance, maintenance, and HOA fees if applicable.