Most rent vs. own calculators are sales tools in disguise. This one charges both sides for everything. The owner pays the down payment, closing costs, the full mortgage payment, taxes, insurance, and mortgage insurance, and is scored as if selling, with selling costs off the top. The renter invests the same starting cash the owner put in, and every month one side spends less than the other, that side banks the difference into the market. Then we compare what each would actually walk away with.
Loan program
Estimated at 740+ FICO, under 43% DTI
Property tax set to 0.75% a year from the Tennessee average. Override it under Advanced.
6.43%Defaults to today's 30-year average when it loads.
4.1%4.1% is the 56-year national average (1970 to 2026). Rent has never had a down year.
10.0%10% is the long-run S&P 500 total-return average. Both side funds compound at this rate.
10 yrsThe verdict is read at this year. This is the question that decides most rent vs. own math.
Advanced assumptions
Homeowner's insurance
Insurance defaults to 0.35% of the price a year. Enter it either way: the two fields are the same number and stay in step.
Closing costs are what you pay going in, when you buy the home ($12,000 here), and the renter invests that same cash on day one instead. Selling costs are what comes off the top coming out, when you sell, and the owner is charged them in every year of the chart.
Property tax is set by the state and county above, not here. Mortgage insurance is automatic and follows the loan program: PMI (0.37%). Estimated at 740+ FICO, under 43% DTI. Taxes and insurance are held flat, a simplification the footnotes disclose.
The verdict at your horizon
At year 10, owning is ahead by $111,946
Owning pulls ahead of renting in year 4 and stays ahead through year 30 in this scenario. Slide your horizon to see how the answer changes with how long you stay.
Breakeven year
4
Owning, month one
$2,868/mo
Renting, month one
$2,000/mo
Rent in your final year
$2,871/mo
Owner walks away with
$307,890
Renter walks away with
$195,944
Owner: sell that year, pay off the loan, keep the side fundRenter: the invested portfolioYour horizon
How the verdict is built · Year 10(hover the chart to change the year)
Sale, net of costs
$629,432
−
Loan balance
$321,582
+
Owner side fund
$39
=
Owner wealth
$307,890
vs
Renter portfolio
$195,944
=
Advantage
$111,946
The renter's portfolio starts with the owner's down payment plus closing costs invested on day one. Each month, whichever side pays less for housing invests the difference at the selected return. The owner is always scored as if selling that year, with selling costs deducted, the strictest honest test.
At these inputs, owning starts at about $2,868 a month against $2,000 rent, so the renter banks the difference early and starts ahead: on day one the renter holds the invested down payment and closing costs while an immediate sale would cost the owner both sets of transaction costs. Rent compounds at 4.1% a year while the mortgage payment stays fixed. Rent passes the full cost of owning around year 10, and from there the flow reverses and the owner banks the surplus. The owner first catches the renter in year 4. Read at your year-10 horizon, owning walks away ahead by $111,946. Hover any year to watch the calculation strip rebuild the number in front of you.
Rent vs. own comparison at the default assumptions ($400,000 home, 5% down, $2,000 rent, 6.43% rate, 4.1% rent growth, 10% investment return): owner walk-away wealth versus renter portfolio by year. Owner wealth is the home value net of selling costs, minus the loan balance, plus the owner's side fund.
Year
Owner walk-away wealth
Renter portfolio
Advantage
0
-$8,000
$32,000
-$40,000
5
$128,455
$107,988
$20,467
10
$307,890
$195,944
$111,946
15
$577,554
$322,388
$255,166
20
$1,001,537
$530,428
$471,109
25
$1,664,891
$872,718
$792,173
30
$2,705,159
$1,435,890
$1,269,268
Rent's losing streak
0 down years
in 56 years of national rent data, 1970 to 2026
Rent's worst year ever
+0.24%
2010, the bottom of the housing crash. It still went up.
The two growth rates
4.1% vs 5.4%
rent vs. home prices, annual average, 1970 to 2026
What 4.1% compounds to
3.2x
your rent, 30 years from now, at the average
What this means for you
A calculator is only honest if it can tell you not to buy. This one can, and sometimes does.
The flow flips, and only one way
Owning costs more than renting on day one, and the gap is real money. But the mortgage payment is fixed while rent compounds, and national rent has never had a down year in 56 years. At the defaults, rent catches the full cost of owning in year 10, mortgage insurance drops off in year 12, and eventually the loan retires entirely. Renting starts cheaper. Owning ends cheaper. The whole question is what happens in between, and that is what the chart shows.
Your horizon is the answer
Transaction costs are why short stays favor renting: closing costs going in and selling costs coming out are a fixed toll that a few years of appreciation may not cover. Slide the horizon to five years and watch the verdict tighten or flip. If you are confident you will stay put for five or more years, the math usually starts working for you. If you might move in two, it usually does not, and this tool will say so.
When renting wins, believe it
Drop the rent low enough, push the rate high enough, or shorten the stay, and the blue line finishes on top. That is not a bug. A cheap-enough rental with the savings genuinely invested every month is a legitimate wealth strategy. The honest catch is the word genuinely: the model assumes the renter invests every surplus dollar with perfect discipline for decades, and rent keeps compounding underneath the whole plan.
Read it honestly. This model leans against the owner in some places and for the owner in others, and both lists matter. Against the owner: they are charged closing costs going in, full selling costs every single year as if liquidating, and every dollar of payment, taxes, insurance, and mortgage insurance. For the owner: maintenance, repairs, and HOA dues are not charged, and they are real. For the renter: the model assumes every surplus dollar is invested immediately with perfect discipline, compounds untaxed, and rent rises smoothly at the average rather than in the lumps real leases deliver. Steady average growth every year, on homes, rent, and investments alike, is a simplification no real decade will match. Every figure is a national average and a historical one; past performance does not predict future results. Education, not investment advice.
Sources and model: rent growth default of 4.1% per year is the compound annual growth of the CPI Rent of Primary Residence index, 1970 to 2026 (FRED: CUUR0000SEHA), a series with zero annual declines in 56 years; its worst year was +0.24% in 2010. Home value compounds at 5.4% annually, the compound annual growth of the Average Sales Price of Houses Sold (FRED: ASPUS), 1970 to 2026. The 10% investment return default is the long-run S&P 500 total-return average; both the renter's portfolio and the owner's side fund compound at the selected rate, applied monthly. The mortgage payment comes from the standard amortization formula at the selected rate over 30 years; the rate defaults to the site's live 30-year average when available (Mortgage News Daily via the calculator's source, rounded to 0.125 and bumped 0.125 as the conservative case), and is adjustable. Carrying costs charged to the owner: property taxes set from the selected state and county (defaulting to the Tennessee state average of 0.75% of price per year) and homeowner's insurance defaulting to 0.35%, enterable as either a percentage or a dollar amount and held flat for the full period. Mortgage insurance follows the selected loan program, using the same terms as the payment calculator: Conventional PMI by down payment tier (0.52%, 0.37%, or 0.27% of the original loan per year), charged until the balance amortizes to 78% of the original purchase price, the automatic termination standard; FHA at 1.75% upfront financed into the loan plus an annual 0.55% or 0.50%, which runs for the life of the loan under 10% down and 11 years at or above it; VA at a funding fee of 1.25% to 3.30% financed by usage type and down payment, with no monthly mortgage insurance and no fee when exempt; USDA at a 1.00% guarantee fee financed plus a 0.35% annual fee for the life of the loan. Borrower-requested earlier PMI removal exists in practice; the model uses the automatic rule as the conservative case. The renter's portfolio begins with the owner's down payment plus closing costs (defaulting to 3% of price) invested on day one. Each month the model compares the full cost of owning against that month's rent, and whichever side pays less invests the difference at the selected return; rent steps up once per year at the selected growth rate. Owner wealth in any year equals the home's value net of selling costs (defaulting to 7%), minus the loan balance, plus the owner's side fund; renter wealth equals the portfolio. The breakeven year is the first year owner wealth reaches renter wealth; the verdict is read at the selected horizon, and the two can differ when the lines cross more than once. Maintenance, repairs, HOA dues, tax effects, and rent deposits are excluded on both sides. Both growth rates are long-run historical averages applied smoothly and are not predictions.
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