Rent vs. Buy Simulator · Summary
Based on a $425K home, $2,200/mo rent, and a 20-year horizon. Which option builds more wealth? Rental quality context: roughly similar quality between renting and buying.
After 20 years
Buying builds more wealth
by $33K
Quality context: roughly similar quality between renting and buying.
Total buying wealth
$532K
Total renting wealth
$500K
Wealth difference
+$33K
Breakeven year
Year 17
Monthly cost comparison (initial)
Scenario assumptions
Home price
$425K
Monthly rent
$2,200/mo
Rental quality comparison
Similar
Down payment
20% ($85K)
Time horizon
20 years
Mortgage rate
6.5%
Loan term
30 years
Property tax
1.2%
Insurance
$1,800/yr
HOA
None
Maintenance
1% of value/yr
Closing costs
3%
Rent growth
3%
Home appreciation
3%
Investment return
5.5%
What’s driving this
At these settings, buying builds $578K in home equity over 20 years while the renter's investment portfolio would reach $500K. After accounting for estimated selling costs, buying produces a stronger financial position. The crossover happens around year 17. This scenario assumes similar quality between renting and buying, making it closer to an apples-to-apples comparison.
This summary is for educational purposes only and does not constitute financial advice. Results are estimates based on the assumptions shown above. Actual outcomes will vary based on market conditions, tax implications, maintenance costs, and other factors not fully captured here. Selling costs are estimated at 6% of home value. Consult a financial advisor for personalized guidance.