Rent vs Buy Calculator (Opportunity Cost)
Destroy the myth that renting is throwing money away. Compare the unrecoverable costs of both strategies.
The Purchase
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The Rental
$
Rent vs Buy Calculator (Opportunity Cost) Methodology & Instructions
Step-By-Step Guide
- Enter the cost of the home you want to buy.
- Enter your current monthly rent for a similar property.
- Set your time horizon (How long will you live there?).
- Click calculate to see whether renting + investing the difference beats buying.
Sunk Cost Comparison Algorithm
Net Worth = (Home Value - Mortgage Balance) vs (Invested Down Payment + Monthly Savings Difference)
Understanding Your Results
| Unrecoverable Costs (Renting) | Unrecoverable Costs (Buying) |
|---|---|
| Monthly Rent Payment | Mortgage Financing Fees (Vast majority of early payments) |
| Renter's Insurance (Very cheap) | Property Taxes (1-2% of home value annually) |
| Nothing else. Your risk is capped. | Maintenance (1% home value annually), HOA fees, Closing Costs (2-5%) |
Frequently Asked Questions
Is renting throwing money away?
No. This is a common myth. Renting provides a fixed cap on your housing costs, allowing you to invest the difference (down payment and maintenance savings) into the stock market.
When is it better to buy a house?
Generally, buying wins out financially if you plan to stay in the exact same location for 7 to 10+ years, allowing property appreciation to out-pace the massive sunk costs of closing fees and financing/profit.
Primary Reference Sources: The 5% Rule of Home Buying (Ben Felix)
Standardized Calculation Engine · Last updated July 6, 2026