Rent vs buy — the number the quote leaves out
Almost everyone compares the rent to the wrong number.
Tax, insurance and upkeep move the gap, and the deposit moves it again. Run your own house, then
see why the usual comparison fails.
$377
Rent $2,400 against a $2,023 mortgage quote, a month.
$415
$2,896 against $2,481 once tax, insurance and upkeep are in.
Rent or buy: which one leaves you better off?
Buying is not a better deal than renting, and renting is not throwing money away. Which one wins depends almost entirely on two numbers nobody can know in advance: what the house does, and what the money would have done instead. This tool runs both paths month by month and tells you the year buying overtakes renting — or tells you plainly that it never does. Change the two market assumptions and watch how far the answer moves. That movement is the real lesson here.
The free version answers the question over 10 years and says so plainly when it has clamped. Pro extends it to 50, compares three scenarios side by side, unlocks the sensitivity grid — the break-even year across a range of appreciation and return assumptions, which is the honest form of this answer — and adds image and CSV export.
The shareable link is free, for everyone, always. Pro is a separate one-time purchase — if you already subscribe to DCA Simulator Pro, this is not included in it. Worth knowing before you click, rather than at the checkout.
Educational content only — not financial advice. This compares two financial paths and nothing else. It does not price security of tenure, the freedom to move, the cost of a landlord selling out from under you, or what it is worth to you to own the place you live. Mortgage interest deductions, transfer taxes and PMI are not modelled. Every figure rests on assumptions you can see and change, and none of them is a forecast.
Almost everyone compares the rent to the wrong number.
Rent is $2,400. The mortgage quote is $2,023. Owning looks cheaper by $377 a month, and the conversation usually ends right there, because both figures arrived looking like the same kind of thing.
Property tax, insurance, maintenance. On this house that is another $873 a month in year one, so the real comparison is $2,896 against $2,481 — and it points the other way.
The $92,000 that went in the door. For the renter that capital stays invested and compounds for the entire period. It never appears in the monthly comparison, and over ten years it is the largest single term.
The mortgage payment is the most quoted number in this decision and the least useful one. It is a financing term, not the cost of owning a house.
Part of that payment is interest, which is gone. Part is principal, which is not a cost at all — it is you moving money from one pocket to another. Around it sit taxes, insurance and upkeep, which are pure carry and which rise every year. Netting all of that out is arithmetic, and it is arithmetic nobody does standing in a kitchen deciding whether to make an offer.
Buying does not compete against renting. It competes against renting plus whatever the down payment would have been doing in the meantime.
That second half is what makes this hard to intuit. The down payment does not sit still in the alternative world — it earns, it compounds, and by year ten it has become a serious number in its own right. Leaving it out does not make the comparison simpler. It makes it wrong in one specific direction, and always the same one.
None of this argues for renting. It argues that the decision has a break-even date, that the date moves a long way when the inputs move a little, and that you can only make the call properly if you have seen where yours lands. Some people run these numbers and buy immediately. That is a fine outcome. Guessing is not.
Nothing here is hidden. Check every line.
Ten years, the $400,000 house, the $2,400 rent, everything at the settings the tool loads with. This is where the $32,533 comes from and why the break-even never arrives on these particular assumptions.
| Ten years of owning — where the money went | Cash out |
|---|---|
| Mortgage interest | $193,998 |
| Property tax | $51,131 |
| Maintenance | $46,483 |
| Insurance | $20,917 |
| Principal repaid — not a cost, this becomes equity | $48,716 |
| Equity recovered if you sell in year ten, after 6% selling costs | $234,029 |
Read the first four rows together: $312,529 of carry over ten years that buys no equity at all. That is the number the monthly payment quote hides, and it is why the mortgage figure on its own is not a comparison. The last row is the good news and it is real — the house does pay back a substantial lump. It is simply not enough here to catch a renter who invested $92,000 up front and the monthly difference thereafter.
Net worth at year ten — owning $234,644 · renting $267,177 · renting ahead by $32,533
So why does buying never catch up here, even given fifty years? Because of one default, stated openly in the tool: the house appreciates at the rate of inflation. That is not a forecast and it is not pessimism. It is a refusal to make a forecast. House prices have run anywhere from below inflation to far above it depending entirely on the decade and the metro, and any single figure shipped as a default would be read as a prediction for your market. So the tool starts from “in real terms, nothing moves unless you tell it to” — an assumption you can obviously see and obviously change.
Change it, and the answer moves immediately. Here is the same engine, same house, same everything, with one input altered at a time over a thirty-year horizon.
the default
Never breaks even
+17%
Breaks even year 5
+33%
Breaks even year 3
+67%
Breaks even year 2
Same house, same assumptions, one input moved — thirty-year horizon
A seventeen percent change in one input takes the answer from “never” to “year five”. That is the finding, and it is a more useful one than any single break-even year: this decision is dominated by what you would otherwise pay in rent, and that is the input people treat as fixed background rather than as the variable it is.
Rent is not the only lever — on this house, appreciation at 5% instead of 3% breaks even in year four, and a 4% mortgage instead of 6.5% also lands in year four. But rent is usually the one you can actually observe. You can look up what the comparable unit down the street costs. You cannot look up what your metro does over the next decade, and anyone who tells you they can is selling something.
Which is the case for running it yourself rather than trusting a rule of thumb. The rules of thumb are all statements about somebody else’s inputs.
Two paths, run month by month. No account, no email.
Every assumption is a field you can see and change. Nothing is inferred from your location and nothing is looked up about you. Your figures are sent to this site to be calculated and are never written to a database, kept after the answer comes back, or passed to anyone else.
Describe the purchase
Price, deposit, mortgage rate, term. The rate field opens at 6.5% as a placeholder, not a market average — replace it with the rate you were actually quoted, which is the only one that matters.
Add the carry
Property tax, insurance, maintenance, HOA, and how fast each one grows. The defaults are the conventional rules of thumb — 1% a year for maintenance is roughly right for a median home and badly wrong for a new build or a hundred-year-old house.
Describe the alternative
The rent you would otherwise pay, how fast it rises, and what the capital would earn if invested instead. This is the half that usually goes uncounted, and on most inputs it is the half that decides the answer.
Read the break-even
Both paths run monthly to your horizon, net of selling costs and capital gains tax, and the tool reports the year buying overtakes renting — or states plainly that it does not. There is no third answer.
The one number worth arguing about
The investment return field is where this calculation is most sensitive, so it is worth being exact about what is in it. The default is 7% real — that is, after inflation. It is rounded up from a measured 6.74%: the S&P 500 with dividends reinvested returned 10.02% a year geometric over the 98 years from 1928 to 2025 (A. Damodaran, NYU Stern), against CPI-U inflation averaging 3.07% over the same window (US Bureau of Labor Statistics). (1.1002 / 1.0307) - 1 = 6.74%.
Two honest notes about that. First, it is a rounded figure and not “the historical average” — the measured number is 6.74% and the default is 7%. Second, and more usefully: rounding it up makes buying look worse, not better. This is the rate the renter earns on the capital the buyer sinks into the house, so a generous return favours renting. This tool is mildly biased against the outcome most people arrive hoping for, which is the safer direction for it to lean, but it is still a lean and you should know about it. Lower the field to 4% and the same house breaks even in year seven.
Everything else — appreciation, rent growth, every cost escalator — defaults to the inflation rate. That is a deliberate refusal to forecast, not a prediction that your house will track inflation. Change them. They are the point.
Most complaints about this tool are correct.
A model that claims to settle the rent-versus-buy question would be lying. Here is what this one genuinely cannot do, stated before you find out the hard way.
“Your defaults are rigged against buying.”
The defaults do produce a “never” on the house it loads with, and two of them lean that way on purpose: the return is rounded up from 6.74% to 7%, which favours the renter, and appreciation is pinned to inflation rather than to any bullish housing figure.
Neither is an opinion about property. The return rounding is disclosed in the field and in the section above; the appreciation default is a refusal to forecast a market this tool cannot see. Both are two clicks from being whatever you think is right, and the moment you change them the answer changes. That is the intended use, not a workaround.
“A house is not only a financial asset.”
Entirely true. Security of tenure, freedom to renovate, not being asked to leave at the end of a lease, staying in a school catchment, the sheer relief of being done with landlords — none of that appears anywhere in this arithmetic, because none of it converts honestly into dollars.
The tool’s job is to price the part that can be priced, so you know what the rest is costing you. If it says buying is $30,000 behind over ten years and you want the stability anyway, that is a completely rational purchase. You have just bought it knowingly.
“You cannot know the next ten years.”
No, and neither can anyone selling you a rule of thumb. Every rent-versus-buy answer is a function of two numbers nobody knows in advance: what the house does and what the market does. A tool that returned one confident break-even year and stopped there would be overstating what it knows.
That is exactly why the paid tier’s headline feature is a sensitivity grid rather than a bigger number — the break-even year across a spread of appreciation and return assumptions, so you can see how far the answer moves when those two inputs move. The honest output is a range, not a date.
“The free version stops before the interesting part.”
The free horizon is ten years. Ask for thirty and it will run ten, and it will tell you on the results, in words, that it did — including the horizon you actually asked for. It never quietly answers a shorter question than the one you posed and prints a confident break-even.
Ten years is chosen because most break-evens on realistic inputs land between years five and twelve, so a free run either hands you the whole answer or returns “not within ten years”, which is itself a complete and useful finding. What the paid tier sells is the long tail, not the answer.
Built for people who want the number before the feeling.
This is a calculator, not a recommendation engine. It will not tell you what to do, and it has no opinion about whether you should own a home.
It fits if
- You are weighing a specific house against a specific rent, and you want the arithmetic before the emotion.
- You have been told “rent is dead money” or “you are building equity” and neither claim survived your first look at it.
- You are comfortable with the idea that the answer depends on assumptions, and you would rather set them yourself than inherit someone else’s.
- You want to know how long you would need to stay for the purchase to make financial sense — because that horizon, not the monthly payment, is the real constraint.
- You already track your money deliberately and this is one more input, not a life decision you are outsourcing to a webpage.
It does not fit if
- You want to be told whether to buy. It will not do that, and any tool that would is overstating what it knows.
- You are looking for confirmation. The defaults will probably not give it to you, and moving inputs until the answer is the one you wanted is not analysis.
- The decision is not really financial — a growing family, a school catchment, an end to moving every two years. Those are good reasons and this tool cannot price them.
- You need it to model your specific tax code, rent control, an offset mortgage, or a rental income. It does not, and pretending otherwise would be worse than the gap.
- You want a forecast of your local housing market. Nobody has one, including this.
If this is not for you, no hard feelings — close the tab. It is free, it wants nothing from you, and there is no follow-up.
What the rent vs buy calculator can and cannot settle.
Answered against what the tool actually does, not against what would be convenient to claim.
Is it better to rent or buy a house?
Neither, universally. The answer turns almost entirely on two numbers nobody can know in advance: what the house does, and what the money would have done instead. Anyone who answers without those two is answering a different question.
What can be settled is the break-even year — how long you must stay for buying to overtake renting on your own inputs. Below that, renting wins on the arithmetic. Above it, buying does. The tool runs both paths month by month and reports that year, or states plainly that it never arrives.
What is the break-even point for buying a home?
It is the year the buyer’s net position passes the renter’s, measured after selling the house — net of a 6% selling cost and 15% capital gains tax on the default settings. Measuring it before the sale flatters buying, because equity you cannot access without paying to release it is not the same as money.
There is no single answer, which is why the tool asks for your figures rather than quoting a rule of thumb. The free version models up to ten years and says so plainly when it has clamped; Pro extends the horizon to fifty.
Does it include closing costs, maintenance and property tax?
Yes, all of them, and each is a field you can see and change. The defaults are the conventional rules of thumb: 3% closing costs, 6% selling costs, 1.1% property tax a year, 1% maintenance a year, $1,800 annual insurance, 20% down over a 30-year term.
Treat the maintenance figure with suspicion. One per cent a year is roughly right for a median home and badly wrong for a new build or a hundred-year-old house. The mortgage rate opens at 6.5% as a placeholder, not a market average — replace it with the rate you were actually quoted, which is the only one that matters.
Isn’t renting just throwing money away?
No, and the arithmetic is unkind to the phrase. Both paths spend money that builds nothing. The renter’s dead money is the rent. The buyer’s dead money is the mortgage interest, the property tax, the maintenance, the insurance, the closing costs and the selling costs — and in the early years of a mortgage, interest alone can exceed what the same person would have paid in rent.
Only the principal portion of a mortgage payment builds equity, and at the start of a 30-year term that portion is small. The honest comparison is not rent against the whole payment. It is rent against the part of ownership that also buys you nothing, plus what the deposit would have earned elsewhere.
What investment return should I use?
The field opens at 7% real — that is, after inflation. It is rounded up from a measured 6.74%: the S&P 500 with dividends reinvested returned 10.02% a year geometric over the 98 years from 1928 to 2025 (A. Damodaran, NYU Stern), against CPI-U inflation averaging 3.07% over the same window (US Bureau of Labor Statistics). (1.1002 / 1.0307) - 1 = 6.74%. It is a rounded figure, not “the historical average”.
Know which way it leans. This is the rate the renter earns on the capital the buyer sinks into the house, so a generous return favours renting. The tool is mildly biased against the outcome most people arrive hoping for. Lower the field and watch the break-even year move — that movement is the real lesson here.
Is my data saved or sent anywhere?
No. There is no account, no email gate and no sign-up. Your figures are sent to this site to be calculated, and the answer comes straight back — no price, rent or result is written to a database, kept after the response, or passed to any third party. The only thing this page stores in your browser is whether you chose dark mode.
Nothing is inferred from your location and nothing is looked up about you. The shareable result link is free for everyone and carries only the assumptions you chose.
Everything above stays free. Pro goes further.
Pro extends the horizon to fifty years, compares three scenarios side by side, unlocks the sensitivity grid — the break-even year across a range of appreciation and return assumptions, which is the honest form of this answer — and adds image and CSV export.
Paid once. Not a subscription, not a bundle.
The free version answers over ten years and says so plainly when it has clamped, and the shareable link is free for everyone, always. If the ten-year answer already settled it, you do not need this. Educational content only — not financial advice.