Calculator guide
Compare rent paid with the calculator's simplified cash paid to buy over the same number of years.
Formula or method
Rent cost = monthly rent × 12 × years. Buy cash paid = down payment + estimated mortgage payment × 12 × years, using a 30-year amortization; difference is the absolute gap between those totals.
How to use this calculator
- Enter monthly rent, home price, down payment, mortgage rate, and comparison years.
- Review each simplified cash total and the displayed difference.
- Add ownership costs and potential home value separately before making a decision.
Worked example
At $2,200 rent, a $400,000 home, $80,000 down, and 6.5%, five years of rent is $132,000; the model's buy cash paid is about $201,537 including the down payment.
Understanding the result
This is a cash-flow comparison, not a net-worth calculation. It does not credit the buyer with equity or appreciation.
Limitations and assumptions
- Excludes taxes, insurance, maintenance, HOA dues, closing costs, selling costs, investment returns, and rent increases.
- Uses a 30-year mortgage regardless of the comparison horizon and does not model refinancing.
Frequently asked questions
Does buying automatically build equity?
Principal payments can build equity, but this simplified result does not report equity or home value.
Can rent rise?
Not in this fixed-input calculation; enter a representative rent or evaluate several scenarios.
Is the lower total the better choice?
Not necessarily: liquidity, time horizon, risk, and ownership costs also matter.
Sources
Educational comparison only; not financial, tax, or housing advice.