★ MONEY · HOUSING · GUIDES
Buying beats renting by $76,892.03 over 10 years at the defaults — but at 0% appreciation, renting wins by $48,377.93. The whole argument turns on one number: how fast the home gains value. This guide runs the full math on a $400,000 home, line by line, so you can see exactly where the $76,892.03 comes from and what would have to change to flip it.
A $400,000 home, 20% down, 6.50% for 30 years, rent $1,800 a month: the mortgage is $2,022.62 a month and after 10 years the home is worth $537,566.55 against a $271,283.60 balance. Net cost of owning: $170,727.76. Rent over the same 10 years: $247,619.79. Buying wins by $76,892.03. Run your own numbers in the rent vs buy home calculator.
Buying wins by $76,892.03 over 10 years at the defaults: a $400,000 home with 20% down and a 6.50% 30-year mortgage costs $170,727.76 net to own, against $247,619.79 of rent. The monthly picture points the other way — owning costs $2,872.62 a month in year 1 against $1,800.00 of rent, so renting feels cheaper by $1,072.62 a month. That is why comparing the monthly payment to the rent gets the decision wrong: the right comparison is net cost over the whole stay — everything you pay, minus the equity you end up with, against all the rent. On that comparison, buying wins by $76,892.03. But the verdict is not unconditional: it rests on the home gaining 3.00% a year. Take that gain away and renting wins by $48,377.93; drop the rent to about $1,241 a month and renting wins too.
Start with the mortgage. The loan is $320,000.00 — the $400,000.00 price minus the $80,000.00 down payment — at 6.50% for 30 years. The standard amortisation formula gives principal and interest of $2,022.62 a month. Over 10 years that is $242,714.40 of mortgage payments: $193,997.73 is interest, gone for good, and $48,716.40 is principal, which comes back as equity. After 120 payments the balance is $271,283.60. Then the other costs of owning: property tax at 1.10% of the value, starting at $4,400.00 a year and totalling $50,441.07 over the decade; maintenance at 1.00%, starting at $4,000.00 a year and totalling $45,855.52; insurance at $150.00 a month, or $18,000.00. With the down payment, everything comes to $437,010.71 out of pocket. The net cost subtracts what you end up with: the home is worth $537,566.55 against the $271,283.60 balance — $266,282.95 of equity. Cash out $437,010.71 minus equity $266,282.95 is a net cost of $170,727.76. Rent, meanwhile, is $1,800.00 a month growing at 3.00% a year, totalling $247,619.79 — every dollar of it gone. Net cost $170,727.76 against rent $247,619.79 is $76,892.03 for buying. The calculator on the rent vs buy home calculator page runs this same arithmetic on any numbers you enter.
Time is buying’s best friend, because the two forces that favour owning — appreciation and the falling mortgage balance — both compound. At 5 years the home is worth $463,709.63 against a $299,555.13 balance, or $164,154.50 of equity, and buying wins by $23,878.03: net cost $90,799.30 against $114,677.33 of rent. Even a five-year stay comes out ahead at 3.00% appreciation. At 10 years, the headline case, buying wins by $76,892.03. At 20 years the home is worth $722,444.49 against a $178,128.90 balance, or $544,315.59 of equity, and buying wins by $297,576.29: net cost $282,823.80 against $580,400.09 of rent. At 30 years the loan is paid off and the home is worth $970,904.99, and buying wins by $736,758.11: net cost $290,870.87 against $1,027,628.98 of rent. Notice the net cost barely rises after year 10 — $170,727.76, then $282,823.80, then $290,870.87 — because once the mortgage is mostly paid, owning costs little more than tax, insurance, and maintenance. The break-even is earlier still: buying is already ahead in year 1, by $2,705.31, with a net cost of $18,894.69 against $21,600.00 of rent. That year-1 lead is the appreciation talking — the home gains $12,000.00 in its first year — so do not read it as a promise. The fixed vs variable mortgage comparison covers what happens when the rate is not fixed.
There are three ways renting wins, and they are worth knowing before you buy. First, flat prices. If the home gains nothing over 10 years, it is still worth $400,000.00, so equity is only $128,716.40 — the principal you paid, nothing more — and net cost rises to $295,997.73 against $247,619.79 of rent. Renting wins by $48,377.93. Buying is, at its core, a bet on the home gaining value. Second, cheap rent. At $1,400.00 a month, rent totals $192,593.17 over 10 years and buying wins by only $21,865.41. At $1,241.06 a month, the rent total exactly equals the $170,727.76 net cost of owning, and below about $1,241 a month renting wins outright. A below-market rent is an asset worth protecting. Third, a short stay with real transaction costs. This guide’s calculator leaves out closing costs when you buy and selling costs when you sell, and both hit hardest in the first years: a 5% selling cost on a $400,000.00 home is $20,000.00, which nearly wipes out the $23,878.03 five-year lead on its own. Add the opportunity cost of the $80,000.00 down payment, and the case for buying on a short stay gets thinner still. The mortgage rate alone does not flip the verdict: at 7.50%, the payment rises to $2,237.49 a month, yet buying still wins by $44,647.43. The build vs buy home comparison applies the same logic to a new build.
There are two break-evens here, and they answer different questions. The first is time: how long before buying pulls ahead? At the defaults the answer is year 1, by $2,705.31 — but that is the appreciation talking, and on a flat market the time break-even stretches past a decade once you count the transaction costs this calculator leaves out. The second break-even is rent: what rent makes the two sides equal? At the defaults it is $1,241.06 a month — rent below that and renting wins, rent above it and buying wins, over 10 years at 3.00% growth. That turns the whole decision into one comparison: is the rent you would actually pay above or below $1,241 a month? If it is $1,800.00, buying wins by $76,892.03. If it is $1,400.00, buying wins by only $21,865.41. If it is $1,200.00, renting wins. Before you decide, answer three questions honestly: how long will you stay, what will the home be worth, and what would you actually pay in rent? Put the numbers into the rent vs buy home calculator and the verdict will be yours.
Buying, by $76,892.03 at the defaults. The net cost of owning a $400,000.00 home for 10 years is $170,727.76 against $247,619.79 of rent. But at 0% appreciation, renting wins by $48,377.93 — so the answer depends on the home gaining value.
$2,872.62 a month to own in year 1, against $1,800.00 to rent. Owning is P&I $2,022.62 plus tax $366.67, insurance $150.00, and maintenance $333.33. Owning costs $1,072.62 more a month — and still wins over 10 years, because $266,282.95 of it comes back as equity.
$266,282.95. The home grows from $400,000.00 to $537,566.55 while the balance falls from $320,000.00 to $271,283.60. That equity is what turns a $437,010.71 cash outlay into a $170,727.76 net cost.
When the home does not gain value, or when rent is low. At 0% appreciation, renting wins by $48,377.93 over 10 years. At $1,400.00 a month rent, buying wins by only $21,865.41 — and below about $1,241 a month, renting wins outright.
About $1,241 a month. At $1,241.06 a month, 10 years of rent at 3.00% growth totals $170,727.76 — exactly the net cost of owning. Rent less than that and renting wins; rent more and buying wins.
At the defaults, buying is already ahead in year 1, by $2,705.31. But that depends on 3.00% appreciation, and it leaves out closing and selling costs, which hit hardest in the first years. On a flat market, or a short stay, renting wins — run your own numbers in the calculator before deciding.