Worked example: Rent vs. Buy Calculator
Equal unlevered scenarios. This fixed reference example shows one complete scenario; the interactive results above use your current inputs.
View the example inputs
- Home price
- 100000 $
- Down payment
- 100 %
- Annual nominal interest rate
- 0 %
- Term
- 10 years
- Comparison period
- 1 years
- Initial monthly rent
- 0 $
- Annual rent growth
- 0 %
- Annual tax/insurance/HOA/maintenance
- 0 $
- Annual ownership-cost inflation
- 0 %
- Annual home appreciation
- 0 %
- After-tax annual investment return
- 0 %
- Buying closing costs
- 0 %
- Selling costs
- 0 %
| Calculated quantity | Example result |
|---|---|
| Estimated buyer ending equity | $100,000.00 |
| Estimated renter ending portfolio | $100,000.00 |
| Buying advantage (negative favors renting) | $0.00 |
Reading growth and return scenarios
Separate a rate from its compounding convention
An annual effective return already describes a full year of growth. A nominal annual rate needs its compounding frequency to determine the effective growth. A quoted APY, a nominal interest rate and an arithmetic average return are therefore not interchangeable inputs. Use the convention named in the form.
Contributions change both the final balance and how much money you have put in. Compare growth with total contributions rather than calling the entire final balance profit. Timing matters: a beginning-of-period deposit earns growth for an extra period compared with an otherwise equal ending deposit.
Interpret projections as conditional arithmetic
A constant-return projection answers what would happen if the entered assumptions held. It does not model market volatility or establish a future return. Tax, product fees, withdrawals and inflation may change the result unless they are explicitly included.
When a term chart is shown, each point recalculates the same model for a different term. Change one assumption at a time and compare results using a consistent currency, return convention and time horizon.
Formula and calculation method
Both scenarios start with cash equal to the down payment plus purchase closing costs. The renter invests it and the annual buyer-cost-minus-rent difference at year-end.
Buyer wealth=sale value minus selling costs and remaining loan. Rent and ownership costs change annually at the entered rates.
Scope and Limitations
- Annual cash-flow approximation. Excludes tax deductions, deposits and precise transaction timing. Negative renter portfolio values represent an unfunded scenario. Entered future rates are assumptions.
Reference Sources
Frequently asked questions
How does this calculator work?
Both scenarios start with cash equal to the down payment plus purchase closing costs. The renter invests it and the annual buyer-cost-minus-rent difference at year-end.
What assumptions should I check?
Annual cash-flow approximation. Excludes tax deductions, deposits and precise transaction timing. Negative renter portfolio values represent an unfunded scenario. Entered future rates are assumptions. Buyer wealth=sale value minus selling costs and remaining loan. Rent and ownership costs change annually at the entered rates.
Can I save or print this calculation?
Use Copy link with inputs to reproduce the scenario, Download results for a text record, or Print. Where a schedule is shown, its CSV download includes every row.