Break-even stay horizon
--
Years until buying overtakes renting
Example calculation
Strategy comparison
Analyzing housing options...
Initial cash outlay
--
Down payment plus closing
Realized home equity
--
Net equity after selling costs
Renter investment portfolio
--
Ending portfolio balance
Side-by-side financial comparison
Comparing cash flow commitments, transaction costs, and ending net worth over the stay horizon:
| Housing Metric | Option 1: Buy Home | Option 2: Rent and Invest |
|---|---|---|
| Upfront Cash Required | -- | $0 (invested in portfolio) |
| Initial Monthly Housing Cost | -- | -- |
| Mortgage Principal and Interest | -- | $0.00 |
| Monthly Property Tax and Maintenance | -- | $0.00 (landlord responsibility) |
| Round-Trip Transaction Friction | -- | $0.00 |
| Projected Net Worth from Housing | -- | -- |
Transaction Cost Friction:
Buying and selling a home involves substantial round-trip friction (typically 2% to 4% when buying, plus 6% to 8% in broker commissions and transfer taxes when selling). For short stays (under 4 to 5 years), these fees often outweigh property appreciation and favor renting.
Year-by-year net worth trajectory
Tracks net home equity versus renter investment portfolio at each year-end:
| Year | Home Market Value | Mortgage Balance | Net Home Equity | Renter Portfolio | Advantage |
|---|
How this estimates
This calculator compares the financial outcomes of buying a home versus renting an equivalent property and investing the difference in cash flow.
The Homeowner Track: The buyer pays a down payment plus buyer closing costs upfront, and pays monthly mortgage principal, interest, property taxes, maintenance reserves, and insurance. When selling at the end of the stay, sales proceeds are calculated after paying selling costs (agent commissions and transfer taxes) and retiring the remaining mortgage balance.
Two-Way Monthly Cash Flow Tracking: Both tracks operate on an equal monthly housing budget. In months where owning costs more than renting, the renter invests the saved cash flow into their investment portfolio. In months where rent exceeds ownership costs, the homeowner invests the saved cash flow into a liquid investment portfolio. Both portfolios compound monthly at your chosen investment return rate.
Investment and Tax Assumptions: Investment returns assume a constant annual return without annual capital gains taxes or tax drag. Mortgage calculations do not include federal itemized deductions unless specified, reflecting the standard deduction used by most taxpayers under the Tax Cuts and Jobs Act.
Disclaimer: A planning estimate based on your inputs and the assumptions shown. Actual costs and eligibility may differ. Not an offer of credit, mortgage pre-approval, or financial, tax, or investment advice.