The method
How the math works
The usual rent vs. buy argument fails because each side quietly rigs the model. Buyers count equity but forget selling costs. Renters count market returns but forget to actually invest the difference. This calculator runs the same person through both timelines and makes each version invest every spare dollar.
- Same person, two timelines. Both versions of you earn the same income and start with the same pile of cash: the down payment plus closing costs.
- The buyer spends that pile on day one. Down payment to the seller, closing costs to everyone else. That cash is now locked in the house.
- The renter spends nothing on day one, so the exact same pile goes straight into the market instead.
- Every month, each side pays what it must. The buyer pays the mortgage plus property tax, insurance, and maintenance. Tax and maintenance are a percentage of the home's current value, so they grow as the home appreciates; insurance rises with inflation. The renter pays rent, which rises every year.
- Whoever paid less that month invests the leftover. Early on that is usually the renter, because rent starts below the full cost of owning. But rent keeps climbing while the mortgage payment is frozen, so at some point the sides usually flip and the buyer becomes the one investing the difference. Both portfolios compound at the market rate. Skipping that flip is how most calculators accidentally rig the fight for renting.
- Score it at any year by cashing out both timelines. The buyer's wealth is the home's value minus selling costs and whatever is left on the loan, plus anything they invested. The renter's wealth is their portfolio. The chart plots both lines; wherever they cross, the lead changes hands.
Defaults are long-run historical averages: about 10% nominal for the S&P 500, about 4% for home prices, 3.5% rent inflation. All figures are nominal, so inflation cancels out of the comparison. Change any assumption to match your own expectations, then judge the chart, not the vibes.
What's deliberately left out: mortgage interest deductions (most filers take the standard deduction), PMI, HOA fees, capital gains tax on the portfolio, and refinancing. Each cuts both ways and none changes the shape of the answer, but if one matters a lot to your situation, treat the result as a starting point.