Rent vs Buy
Enter your real numbers. We simulate net worth month by month for both paths and tell you which one wins.
Renting & investing wins by $4,032,463
The monthly gap between renting and owning is large enough that investing it consistently outgrows the home's appreciation.
Net worth over time
How this verdict is calculated
The comparison is only fair if both people start with the same money and spend the same amount every month, so that's how the simulation is built. The buyer puts the down payment into the home, then pays the loan EMI plus upkeep every month — upkeep is fixed at 1% of the home's value per year. The renter invests that same down payment in the market instead, pays rent, and invests whatever is left of what the buyer would have spent. If rent ever comes out higher than the buyer's monthly cost, the renter draws the shortfall from the portfolio instead.
Nothing here is a single formula, because rent, the home's value and the invested gap all change over time. The tool steps through your time horizon month by month: rent grows at the rent-growth rate, the home appreciates once a year, and the invested pile compounds monthly. At the end it compares net worth — for the buyer, the home's value minus the loan still owed; for the renter, the investment portfolio. If your horizon ends before the loan does, the tool uses the real remaining balance at that point, not the original loan.
What the default numbers say
With the default setup — a $83,200 home, 20% down ($16,640), an 8.5% loan over 20 years, $260 monthly rent growing 5% a year, 6% home appreciation and a 12% investment return over 10 years — the EMI comes to about $578. Add upkeep and the buyer is spending roughly $647 a month at the start, against $260 for the renter.
After 10 years the home is worth about $140,565 with $46,588 of loan still owed, so the buyer's net worth is about $93,977. The renter's portfolio has grown to about $135,914. Renting and investing finishes roughly $41,938 ahead. That is a result, not a rule: it comes from investing a monthly gap of about $387 at 12% and beating a home that appreciates at 6%. Change those assumptions and the answer changes with them.
What flips the answer
Holding everything else at its default, these are the tipping points the simulation finds. They are the numbers worth testing against your own situation.
Monthly rent
Buying only catches up when rent reaches about $412 a month — roughly 5.9% of the home's price per year. Below that, renting stays ahead. The lower your rent is relative to the price, the harder buying has to work.
Home appreciation
The home would need to appreciate about 9.3% a year, against the 6% default, for buying to come out on top. A few points of extra appreciation is worth far more than it sounds because it applies to the whole price, not just your down payment.
Investment return
If the market return falls to about 7%, the two paths tie; below that, buying wins. Set the return equal to the appreciation rate — both at 6% — and buying wins by about $6,809. The verdict is largely a bet on the gap between those two rates.
Time horizon
With the default inputs, renting stays ahead at every horizon from 3 to 20 years, and its lead widens: about $8,862 at 3 years, $41,938 at 10 and $248,426 at 20. Time doesn't rescue buying on its own — the rate gap does.
What this tool leaves out
Every real decision has costs a slider can't capture. Here is what isn't modelled, and which way each omission pushes the numbers:
- Stamp duty, registration, brokerage and legal fees when buying — a one-off cost that is gone the moment you sign. Leaving it out flatters buying.
- Selling costs at the end of your horizon. Leaving them out flatters buying.
- Property tax and any running costs above the 1% maintenance allowance. Leaving them out flatters buying.
- Tax on the renter's investment gains. Leaving it out flatters renting.
- Home-loan tax deductions, available in many countries under rules that change often. Leaving them out flatters renting.
- Whether the renter would really invest the difference every month. A mortgage is forced saving; a monthly investing habit isn't. Assuming perfect discipline flatters renting.
- Market volatility. The model compounds a smooth 12%, while real returns arrive unevenly and a bad decade can fall far short.
How to use your result
Treat the headline as a starting point and stress-test it. Get a real rent quote for a comparable home rather than guessing, enter a market return you'd still defend after a poor decade rather than the best one you remember, and then move rent, appreciation and return towards the tipping points above to see how far your situation sits from them.
The tool labels any result within 8% as a close call. When it lands there, the money side is genuinely a wash and the deciding factors are non-financial: stability for a family, freedom to renovate, protection from rent increases, and how likely you are to move in the next few years. When the gap is large, check whether it survives a lower investment return and a higher purchase cost before acting on it.
Keep going
- Rent vs Buy a Home — the lesson behind this verdict, including why 'rent is wasted money' skips the maths
- Home Loan Basics — how tenure, rate and prepayment change the true cost of a loan
- EMI Calculator — work out the monthly payment for any loan amount, rate and tenure
- Home Affordability Calculator — check whether a specific price fits your income before comparing it to renting
- SIP Calculator — the rent-and-invest side — see what a monthly amount grows to at the return you assume
Common questions
Not by default — those are one-time costs that vary a lot by city. If you know yours, mentally add them to the down payment slider.