Compare the financial outcomes of buying vs. renting over time. This calculator models both scenarios, taking into account mortgage payments, property taxes, insurance, maintenance, HOA fees, and investment returns.
How It Works
Buying Scenario: You purchase a home with a down payment and take out a mortgage. Each month, you make mortgage payments (principal + interest), pay property taxes, insurance, HOA fees, and maintenance costs. Over time, you build equity as you pay down the mortgage principal, and your home appreciates in value. If your monthly housing costs are lower than rent, the difference is invested in the market and earns returns.
Renting Scenario: You rent a property and invest the money you would have used for a down payment in the market. Each month, you pay rent (which increases annually). The difference between what you would have spent on total housing costs (if you bought) and your actual rent is invested in the market, earning returns over time. If rent exceeds what homeownership would cost, no additional investment is made that month.
Net Worth Calculation: For buying, your net worth equals the current home value minus the remaining mortgage balance, plus any investment gains. For renting, your net worth is the total amount invested plus investment returns. The calculator compares these two scenarios to show which strategy builds more wealth over your chosen time period.
Historical Data: You can use actual historical data from the San Jose House Price Index (1991-2025) for home appreciation and NASDAQ Composite returns (1971-2025) for investment performance. This shows how real market conditions would have affected your decision during different time periods.
Updates
December 27, 2025 12:00: Improved bar chart clarity by simplifying the net worth breakdown visualizations and adding net worth line overlays to both buying and renting charts. Added detailed tables of raw calculated values for both scenarios, allowing users to explore the month-by-month breakdown of all components.
December 27, 2025 09:10: Fixed property tax calculation. Property taxes now grow at a fixed rate (default 2%) rather than scaling with home value appreciation. This better reflects reality in California where Proposition 19 caps annual property tax increases at 2%, regardless of how much the home's market value increases. The property tax is calculated based on the original assessed value with the annual cap applied. Also fixed the renting scenario monthly contribution calculation to use the current monthly housing cost (which varies over time) instead of the static initial housing cost, providing more accurate investment comparisons. The impact of these changes slightly increases the final net worth for the home buying scenario but has a larger increase in the renting scenario because the amount of money invested every month now increases to reflect the increasing housing costs.
TODO
- Consider investment account taxation. Currently, all investment returns are treated as completely tax-free (like a Roth IRA), which overstates the renting scenario benefits. In reality, taxable brokerage accounts require capital gains tax on appreciation (15-20% federal + state), and traditional 401k/IRA accounts require income tax on the entire withdrawal (contributions + gains). Add options to model different account types: taxable brokerage, Roth IRA, or traditional 401k/IRA.
- Add tax write-offs for home ownership, including mortgage interest deduction and property tax deduction (SALT). These can be significant, especially in the early years of the mortgage when interest payments are highest. Note that the Tax Cuts and Jobs Act (2017) capped SALT deductions at $10,000 and increased the standard deduction, making itemization less common.
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