This calculator compares two financial paths over 30 years using transparent finance formulas. The key idea is an apples-to-apples comparison: buyer and renter have the same total monthly cash outflow — they just allocate it differently.
- Mortgage payment uses the standard amortization formula: M = P · r(1+r)n / ((1+r)n−1), where r is the monthly interest rate and n is months.
- PMI is added monthly while loan-to-value is above 80%, then automatically drops off.
- Home value grows at your annual appreciation rate (compounded yearly).
- Property tax & maintenance are recalculated each year against the current home value; insurance, HOA, and utilities grow at your "Home Expenses Increase" rate.
- Rent grows at your annual rent-increase rate (compounded yearly).
- Both buyer and renter contribute "Monthly Investment If Renting" to a baseline investment portfolio that compounds monthly at your investment-return rate.
- The renter additionally invests the monthly savings from renting (buy_monthly − rent_monthly) at the same return. This makes total monthly cash outflow identical between scenarios.
- Buyer Net Worth = home equity (current home value − remaining mortgage balance) + buyer's investment portfolio.
- Renter Net Worth = renter's investment portfolio (starting savings + monthly contributions, compounded).
- Breakeven year is the first year the buyer's total net worth meets or exceeds the renter's.
This tool is for educational comparison only. It does not account for tax deductions on mortgage interest, capital gains, real-estate transaction costs at sale, or major life changes. Talk to a financial advisor for guidance on your specific situation.
