Capital allocation comparison

Buying a home is also an investment decision. Compare it honestly.

Run the same home and the same horizon two ways: buy and build equity, or rent and invest the difference. The calculator shows where each path actually lands — including closing costs, maintenance, selling costs, rent growth, and the opportunity cost of money tied up in the down payment.

Math runs in your browser All defaults editable Not investment advice
Independent housing-cost intelligence. Math runs in your browser. We don't capture inputs, sell data, or send you to a lender. More on what OwningCost is.

Home purchase

Home price
$
Down payment
%
Mortgage rate
%
Term
yrs
Property tax
% / yr
Insurance
/ yr
HOA
/ mo
Maintenance reserve
% / yr
Closing costs
% of price
Selling costs on exit
% of sale
Annual home appreciation
% / yr

Rent + invest scenario

Starting monthly rent
$
Annual rent growth
% / yr
Renter's insurance
/ yr
One-time moving + deposit
$

Investment assumptions

Asset benchmarkdetermines the expected return below
Expected annual return
% / yr
Hold period
yrs
How this is calculated

Buy path: Loan amount = price × (1 − down %). Monthly P&I uses the standard amortization formula. PITI + HOA + maintenance reserve = monthly out-of-pocket. At year N, home value = price × (1+appr)N; remaining mortgage balance from amortization; equity = value − balance. Net proceeds = equity − selling costs.

Rent + invest path: Initial portfolio = down payment + closing costs (the cash you'd otherwise tie up). Monthly contribution = (buy monthly cost) − (rent + renter's insurance). If buying costs less monthly than renting, the difference is treated as zero (no negative contributions — you can't rent and invest cash you don't have). Portfolio compounds monthly at the chosen rate.

Net position at exit: Buy = net proceeds. Rent+Invest = portfolio value (gains realized; tax not modeled here). The difference is the "verdict" headline.

Read the full methodology →Defaults reviewed May 2026

Your scenario at year 7
Net position leads:
—
by —
Side-by-side at year 7
Buy

Buy path

Home value at exit—
Mortgage balance remaining—
Equity—
Selling costs—
Net proceeds—
Invest

Rent + invest path

Initial investment—
Total contributions—
Investment growth—
Total rent paid—
Portfolio value—
Risk & context
  • Liquidity: the rent+invest path keeps capital liquid. Home equity requires selling or borrowing to access.
  • Volatility: portfolios swing year-to-year. Home values move slower but aren't immune.
  • Concentration: a home is a leveraged bet on one property in one ZIP. Index funds spread risk across hundreds of companies.
  • Friction: selling a home costs ~7% and takes weeks. Selling stocks takes seconds and costs ~0%.
  • Time horizon: short holds (under 5 years) usually favor renting; long holds (10+) usually favor buying.
Estimates only. This is not investment advice. Returns are scenario assumptions, not predictions. Past performance does not guarantee future results.
Why this comparison matters

Buying a home is a capital allocation decision, not just a monthly payment.

Most rent-vs-buy calculators stop at the monthly cost comparison. This one keeps going — what happens to the money you'd otherwise put into the home if you didn't?

A 10% down payment on a $425,000 home is $42,500. Add typical closing costs and you're tying up roughly $55,000 in cash on day one. That money is now sitting in home equity, where it's illiquid, undiversified, and subject to whatever happens to your specific property in your specific ZIP code. The question this calculator asks is simple: if you'd put that same $55,000 into an index fund instead — and added the monthly cash-flow difference between renting and owning — where would you actually land at the end of your hold period?

The answer depends on assumptions you control. Home appreciation, investment return, rent growth, and hold period are the four big levers. None of them are predictable. What this calculator does is let you set defensible numbers and see the math run cleanly — including all the costs both paths actually incur.

Renting is not "throwing money away"

The phrase implies that rent is uniquely wasteful while mortgage payments are uniquely productive. The math doesn't agree. A typical mortgage payment in years 1–7 is mostly interest — money paid to a bank, not equity — plus property tax (paid to the county), insurance (paid to an insurer), and maintenance (paid to keep the asset functional). The portion that builds equity is real but smaller than people assume, and it comes at the cost of capital tied up in the down payment that could otherwise compound elsewhere.

Buying often wins this comparison anyway, especially over long horizons in appreciating markets. But "rent vs. own" is a real trade-off with assumptions on both sides — not a moral question with one right answer.

Why the assumptions actually matter

Three numbers dominate the verdict in most scenarios: annual home appreciation, expected investment return, and hold period. The historical long-run U.S. averages are roughly 3–4% real for home prices and 6–7% real for the S&P 500. But the deltas swing widely by metro and decade. The right way to use this calculator is to run multiple scenarios — base case, optimistic case, pessimistic case — and see how robust the answer is to your assumptions. If the verdict flips when you change one number, the answer isn't really a verdict.

Asset comparison

What "investing" means here.

The calculator offers four asset benchmarks plus a custom mode. Each is a scenario assumption, not a recommendation.

S&P 500 (default)

The most common benchmark for a diversified U.S. equity portfolio. The historical long-run nominal return is roughly 10% per year (about 7% real, after inflation). This number includes dividends reinvested and assumes a buy-and-hold strategy through multiple cycles. It does not account for taxes, fees, or the behavioral cost of staying invested through 30%+ drawdowns. We default to 7% to keep the comparison real-vs-real with home appreciation.

Cash / conservative

Treasury bills, money-market funds, and short-duration bonds. Recent 4% reflects the current rate environment. This is the right comparison for risk-averse savers who'd actually hold the money in low-volatility instruments rather than equities. Long-run real return is closer to 0–1%, but nominal is 3–5% in normal rate environments.

Bond / moderate

A diversified fixed-income portfolio. Long-run nominal return historically falls between cash and equities — roughly 5%. Lower volatility than stocks, higher than cash. A reasonable proxy for a 60/40 portfolio if equities are doing the work of the bond side.

Custom return

For users who want to model a specific assumption — a personal target return, a financial advisor's projection, or a scenario you want to stress-test.

Bitcoin (advanced — high volatility)

Available, but framed honestly: long-run returns from Bitcoin's history have been extreme, but so have the drawdowns — 70–80% peak-to-trough declines that historically lasted 1–4 years. Comparing a home to Bitcoin is comparing two assets with very different volatility profiles, and the comparison is mostly useful for sensitivity testing, not as a baseline. Use it to see how much of the verdict is driven by which asset you're modeling.

This calculator is not a recommendation to invest in any of these assets. It's a tool to help you see what your assumptions imply. The methodology page documents the math; the assumptions are yours to set.

FAQ

Common questions about this comparison.

Is buying always better than renting?
No. The right answer depends on hold period, local price-to-rent ratio, your specific rate, and the return you'd realistically earn on the money you'd otherwise tie up in the down payment. Short holds (under 5 years) usually favor renting because closing costs and selling costs aren't recovered by appreciation. Long holds in appreciating markets usually favor buying. The calculator lets you see where your specific scenario lands.
Why compare a home to the S&P 500?
Because it's the most common benchmark for what you'd do with the money instead. If you're not buying, the cash you would have used for a down payment doesn't sit idle — most people invest it. The S&P 500 is the standard yardstick for what diversified equity exposure has historically returned. It's not a recommendation; it's the comparison most users implicitly want.
Should I compare a home to Bitcoin?
For sensitivity testing, sure. As a baseline, no. Bitcoin's historical returns include drawdowns of 70–80% that lasted years — if you happen to need to liquidate during one, the headline return doesn't apply to you. The comparison is most useful for showing how much of a "rent and invest" verdict depends on which asset you're modeling. The calculator includes it as an advanced option specifically to allow that kind of stress test.
Does this include selling costs and maintenance?
Yes. Selling costs default to 7% of sale price (agent commissions, title, transfer taxes, concessions) and are subtracted from equity to get net proceeds. Maintenance reserve defaults to 1% of home value annually, treated as a real ongoing cost on the buy path. Both are editable. Skipping these is the most common error in DIY rent-vs-buy spreadsheets, and it usually overstates the buy path by 5–15% over a typical hold.
Is this investment advice?
No. OwningCost is not a financial advisor and this calculator is not a recommendation. It's a scenario-modeling tool that runs your assumptions through documented math. The decision to buy a home, rent and invest, or anything in between is yours to make with the relevant professionals — a financial advisor, real-estate agent, attorney, or CPA where appropriate.
What assumptions matter most?
Three: home appreciation, investment return, and hold period. These three numbers usually determine the verdict. Closing costs, selling costs, and maintenance also matter — skipping them inflates the buy path. Rent growth matters more than people think on long holds. Property tax and insurance matter less than the headline rate suggests. Run the calculator at your base assumptions, then run it again with each of those three swung 1–2 points to see which way the answer moves.
What time horizon matters most?
The one that matches your real plans. If you're realistically going to be in a home 5 years, run the calculator at 5 — not at 30. Most rent-vs-buy frameworks default to 30 years and produce wildly optimistic answers because compounding has had three decades to do its work. The honest answer for most U.S. households (median tenure roughly 8–13 years depending on era) is closer to 7 years than 30.
Does the calculator account for taxes on investment gains?
Not in this version. The portfolio value at exit is pre-tax. Long-term capital gains in tax-advantaged accounts (401k, IRA) defer or eliminate this; in taxable accounts, the realized gain is reduced by your federal and state cap-gains rates. The buy path doesn't model the home-sale capital gains exclusion either ($250K single / $500K married for primary residence). Both omissions roughly cancel for a primary-residence buyer; for an investor with the same money in a taxable account, the rent+invest side overstates somewhat.
Related calculators

Run the related comparisons.

Calculator

Rent vs. Buy

Total cost over your real time horizon — the same comparison from a monthly-cost angle.

 Calculator

True Monthly Cost

The full PITI + HOA + maintenance picture for the buy path.

 Calculator

Down Payment Strategy

5% vs. 10% vs. 15% vs. 20% down — opportunity cost across down-payment sizes.

 Calculator

Buy Now vs. Wait

The same home now vs. 12 months from now — adjacent timing question.

 Calculator

House Poor Risk

If you do buy, where does the budget actually break? Surface the risks.
Compare your scenario

Run the comparison with your numbers.

The calculator is above. Set the price, down payment, rate, and hold period to match your real situation. Toggle the asset benchmark to see how much of the verdict depends on the assumed return.

Open the calculator Read the methodology