Compare the 10-year financial impact of renting versus buying a home, factoring in equity and unrecoverable costs.
Renting Details
Buying Details
10-Year Unrecoverable Costs
Total Rent Paid
$0Winner
vs
Sunk Buying Costs
$0
Interest, Taxes, Maintenance (Equity is excluded)
Estimated Buyer Equity After 10 Years
$0
Home value (at 3%/yr appreciation) minus remaining mortgage balance
Renting is cheaper if its cost is less than the "unrecoverable" costs of buying (interest, taxes, maintenance). Buying also builds equity, shown separately above.
Last updated: August 2026
The True Cost of Housing
We are often told that 'renting is throwing money away' while 'buying is an investment.' In reality, homeownership comes with massive 'unrecoverable costs' like property taxes, maintenance, insurance, and mortgage interest. Sometimes, renting and investing the difference in the stock market yields a higher net worth than buying a house.
How to Use This Tool
Enter your prospective rent versus the purchase price of a home, along with interest rates and property taxes. This calculator breaks down the numbers to show you the true financial impact over time, helping you make a purely mathematical decision.
This calculator is for educational purposes only and is not financial advice. Mortgage rates, home prices, and market conditions change — always enter your own current numbers rather than relying on the defaults shown, and consider speaking with a financial advisor before making a home-buying decision.
Frequently Asked Questions
The 5% rule is a quick math heuristic that states you should calculate the 'unrecoverable costs' of a home (property tax + maintenance + cost of capital, usually totaling about 5% of the home's value annually). If your annual rent is less than 5% of the home's purchase price, renting is financially better.
A standard rule of thumb is to budget 1% of the home's total purchase price every year for maintenance and repairs.
Historically, residential real estate barely outpaces inflation, appreciating at about 3-4% per year, whereas the stock market returns 7-10%. A house is a great place to live, but often a subpar pure investment compared to index funds.
No. This tool compares unrecoverable cash costs — mortgage interest, property tax, and maintenance — against total rent paid. It doesn't model what your down payment or monthly rent savings could have earned if invested elsewhere, which the classic 5% rule does include.
The equity estimate assumes a fixed 3% annual home price appreciation, a rough long-run historical average. It isn't currently adjustable, so treat the equity figure as a ballpark, not a forecast for your specific market.
No. Real estate agent commissions and closing costs typically run 5-6% of the sale price and would reduce your actual equity if you sell — this calculator doesn't subtract them.
No. This is an educational estimate to help you compare the math, not personalized financial advice. Your job stability, how long you plan to stay, local market conditions, and personal goals all matter too — consider talking to a financial advisor for a decision this size.