Rent vs Buy Calculator: Compare Net Worth Year by Year

Compare buying a home with renting one and investing the cash instead. See which leaves you with more net worth, year by year.

An estimate for comparison only, not financial advice.

Default values are illustrative. Replace them with your own figures.

All amounts are nominal. Taxes on investment gains, mortgage interest relief, inflation and changes in rates are not included.

BuyingHome priceDown payment (% of price)Enter 100 for a cash purchase with no mortgage.Mortgage rate (% a year)Fixed for the whole period. The monthly payment uses the same formula as our mortgage calculator.Mortgage term (years)Buying costs (% of price)Stamp duty, legal fees and agent commission paid when you buy. The default is illustrative: stamp duty depends on the price and on your situation, so check the local rates and enter your own figure.Selling costs (% of sale price)Agent and legal fees when you sell. Taken off the home value at the end.Maintenance and ownership costs (% of home value a year)Management fees, repairs and insurance. Grows with the home value.

Property tax or rates% of home value a yearAmount in the first year

The default is illustrative. In some leases the tenant pays rates; if so, add them to the monthly rent instead. An amount grows with the home price each year.

Home price growth (% a year)

Renting and investingMonthly rent for a similar homeRent increase (% a year)Applied once a year, at each lease renewal.Investment return (% a year)What the money not tied up in the home could earn. The renter invests the down payment and buying costs from day one.

Time and returnsTime horizon (years)Invest the monthly savingEach month, whichever choice costs less invests the difference. Turn this off only if you would spend that money.CurrencyChanges how amounts are shown. It does not convert anything.

Renting and investing comes out ahead by HK$304,649.53 after 10 years.

No break-even: renting is ahead at the end of the period.

Buyer net worth at the end: HK$3,952,328.26
Renter net worth at the end: HK$4,256,977.79
Buying minus renting: -HK$304,649.53
Total cost of buying (money not recovered): HK$2,357,505.07Buying costs, interest, maintenance, property tax or rates, and selling costs. Mortgage principal is not a cost: it becomes equity.
Total cost of renting: HK$2,233,743.08
Cash paid by the buyer: HK$4,995,866.81
Cash paid by the renter: HK$2,233,743.08
Monthly mortgage payment: HK$18,859.88
Cash needed on day one: HK$2,010,000.00

Year-by-year comparison (year-end values)
Year	Home value	Mortgage balance	Home equity after selling costs	Buyer investments	Buyer net worth	Renter net worth	Buying minus renting	Rent paid in the year	Buyer costs in the year
Day one	HK$6,000,000.00	HK$4,200,000.00	HK$1,710,000.00	HK$0.00	HK$1,710,000.00	HK$2,010,000.00	-HK$300,000.00	HK$0.00	HK$2,010,000.00
1	HK$6,120,000.00	HK$4,119,396.62	HK$1,908,803.38	HK$0.00	HK$1,908,803.38	HK$2,200,824.66	-HK$292,021.28	HK$204,000.00	HK$292,318.52
2	HK$6,242,400.00	HK$4,035,926.43	HK$2,112,837.57	HK$0.00	HK$2,112,837.57	HK$2,398,367.86	-HK$285,530.29	HK$208,080.00	HK$293,638.52
3	HK$6,367,248.00	HK$3,949,487.46	HK$2,322,251.82	HK$0.00	HK$2,322,251.82	HK$2,602,909.07	-HK$280,657.25	HK$212,241.60	HK$294,984.92
4	HK$6,494,592.96	HK$3,859,974.11	HK$2,537,199.95	HK$0.00	HK$2,537,199.95	HK$2,814,740.62	-HK$277,540.67	HK$216,486.43	HK$296,358.25
5	HK$6,624,484.82	HK$3,767,277.05	HK$2,757,840.49	HK$0.00	HK$2,757,840.49	HK$3,034,168.27	-HK$276,327.78	HK$220,816.16	HK$297,759.05
6	HK$6,756,974.52	HK$3,671,283.04	HK$2,984,336.86	HK$0.00	HK$2,984,336.86	HK$3,261,511.94	-HK$277,175.08	HK$225,232.48	HK$299,187.86
7	HK$6,892,114.01	HK$3,571,874.81	HK$3,216,857.48	HK$0.00	HK$3,216,857.48	HK$3,497,106.31	-HK$280,248.83	HK$229,737.13	HK$300,645.24
8	HK$7,029,956.29	HK$3,468,930.94	HK$3,455,576.00	HK$0.00	HK$3,455,576.00	HK$3,741,301.59	-HK$285,725.58	HK$234,331.88	HK$302,131.78
9	HK$7,170,555.41	HK$3,362,325.66	HK$3,700,671.42	HK$0.00	HK$3,700,671.42	HK$3,994,464.24	-HK$293,792.82	HK$239,018.51	HK$303,648.04
10	HK$7,313,966.52	HK$3,251,928.76	HK$3,952,328.26	HK$0.00	HK$3,952,328.26	HK$4,256,977.79	-HK$304,649.53	HK$243,798.88	HK$305,194.63

Buy: net worthRent and invest: net worth

How this is calculated

This calculator compares the net worth you would have after buying a home with the net worth you would have after renting a similar home and investing the cash that buying would have used. Whichever is higher at the end of your time horizon comes out ahead. It is an estimate for comparison, not advice to buy or rent.

Formula

Buyer net worth = home value × (1 − selling costs %) − mortgage balance + the buyer's investments
Renter net worth = (down payment + buying costs) invested from day one + every monthly saving invested, with growth
Difference = buyer net worth − renter net worth (positive means buying is ahead)

Step by step

Day one. The buyer pays the down payment and the buying costs. The renter keeps that same amount and invests it instead.
Mortgage. The monthly payment uses the same formula as our mortgage calculator: a fixed rate, equal monthly payments, and a balance repaid to zero over the term.
Every month. The buyer pays the mortgage plus maintenance and property tax or rates. The renter pays rent. Rent rises once a year by the increase you enter. Maintenance and property tax are set each year from the home value at the start of that year.
The monthly saving. Whichever choice costs less that month invests the difference: usually the renter, but the buyer once rent overtakes the buyer's costs (for example after the mortgage is repaid). You can switch this off.
Growth. Investments grow at the return you enter, compounded monthly so that a full year adds exactly that rate. The home value grows by the price growth rate once a year.
Net worth. At each year end, the buyer is valued as if the home were sold that day, with selling costs paid.
Break-even year. The first year from which buying stays ahead until the end of your horizon. If renting is ahead at the end, there is no break-even year.
Total cost (context only). For buying, the money you do not get back: buying costs, interest, maintenance, property tax or rates, and selling costs. Repaid principal is not a cost, because it becomes equity. For renting, it is the rent paid. Net worth, not total cost, decides the comparison.

Key assumptions

All amounts are nominal, with no inflation adjustment.
The mortgage rate, home price growth, rent increase and investment return stay fixed for the whole period; there is no volatility and no refinancing.
No tax on investment gains or on a home sale, and no mortgage interest relief.
The renter rents a home like the one the buyer buys. Moving costs, rent deposits, mortgage insurance and early repayment are left out.
Default values are illustrative. Replace them with your own figures.

Worked example: the default inputs

Home price 6,000,000; 30% down payment; mortgage 3.5% a year over 30 years; buying costs 3.5%; selling costs 1.5%; maintenance 0.8% and property tax 0.3% of home value a year; home price growth 2% a year; rent 17,000 a month rising 2% a year; investment return 5% a year; horizon 10 years; monthly saving invested.

Item	Figure
Cash needed on day one (1,800,000 down + 210,000 buying costs)	2,010,000.00
Loan	4,200,000.00
Monthly mortgage payment	18,859.88
Year 1: buyer's monthly costs (18,859.88 + 5,500.00 maintenance and tax) vs rent	24,359.88 vs 17,000.00
Year 1: renter invests each month	7,359.88
Home value after 10 years	7,313,966.52
less selling costs	−109,709.50
less mortgage balance after 10 years	−3,251,928.76
Buyer net worth, year 10	3,952,328.26
Day-one 2,010,000 grown at 5% for 10 years	3,274,078.20
plus monthly savings invested (752,123.73 paid in, worth after growth)	982,899.59
Renter net worth, year 10	4,256,977.79
Difference (buying minus renting)	−304,649.53: renting and investing ahead
Total cost of buying (money not recovered) / of renting	2,357,505.07 / 2,233,743.08

With these inputs, renting is ahead in every year from 0 to 10, so there is no break-even year. Year 0 starts 300,000 behind for the buyer: the 210,000 buying costs plus 90,000 selling costs on day one.

Why the answer flips if the monthly saving is not invested

Run the same inputs with "Invest the monthly saving" switched off and buying comes out ahead by 678,250.06 instead, from year 4 onwards. Nothing about the home changed: the buyer still ends with 3,952,328.26. What changed is the renter. Without investing the monthly saving, the renter has only the day-one 2,010,000 grown to 3,274,078.20.

The reason is simple. A mortgage makes the buyer save: each payment repays some principal, and that principal stays in the home as equity (948,071.24 of the loan is repaid over these 10 years). The renter has no such built-in habit. Renting comes out ahead here only if the renter actually invests both the down payment and the 7,359.88 a month (falling over time as rent rises) that renting saves. Those invested savings are worth 982,899.59 by year 10, which is exactly the 304,649.53 lead plus the 678,250.06 swing. If that money would in practice be spent, switch the toggle off: the result then shows what happens when only the day-one sum is invested.

Questions

Why does the renter invest the down payment?

Buying ties up the down payment and buying costs in the home. A fair comparison lets the renter invest that same money, so the return it could have earned counts as a cost of buying.

What does the break-even year mean?

It is the first year from which buying stays ahead of renting until the end of your horizon, after selling costs. In the year before it, renting is ahead. With the defaults but rent of 24,000 a month, the break-even year is 4; with the defaults but a 4% return over 20 years, it is 9. In the default case itself there is none, because renting stays ahead.

How can renting come out ahead if home prices rise?

Buying has costs that renting does not: buying costs, interest, maintenance, property tax or rates and selling costs. If the money the renter keeps (the day-one sum plus the monthly savings) grows faster than the buyer's home equity grows after those costs, renting can finish ahead even while the home gains value. In the default example the home gains 1,313,966.52 over 10 years, and renting still finishes ahead.

What should I put in buying costs?

Include stamp duty or transfer tax, legal fees and agent commission, as a percentage of the price. Stamp duty often depends on the price and on whether you already own a home, so check the local rates.

Are taxes on investment gains included?

No. Investment returns are not taxed, mortgage interest relief is not applied, and all amounts are nominal. Use an after-tax return if gains are taxed where you live.