Rent vs Buy Calculator

Monthly mortgage payment (P&I)

M = P × [r(1+r)^n] / [(1+r)^n − 1]

P=$320,000, r=0.00583/mo (7%÷12), n=360 months

= $2,129/mo

Standard amortization formula. Early payments are mostly interest; balance shifts to principal over time.

Monthly true cost of buying (PITI + maintenance)

trueCost = P&I + propertyTax + insurance + HOA + maintenance

= $2,129 + $400 + $150 + $0 + $333

= $2,602/mo

The sticker monthly payment understates true housing cost. Tax, insurance, and maintenance typically add 30–50% on top of P&I.

Monthly buy vs rent delta

delta = monthlyCostBuy − monthlyCostRent

$2,602 − $2,217

= $385/mo more to buy

Over 10 years, buying costs $46,196 more in out-of-pocket monthly payments before accounting for equity or appreciation.

Opportunity cost of down payment at year 10

FV = (downPayment + closingCosts) × (1 + investmentReturn)^years

= ($80,000 + $12,000) × (1 + 7%)^10

= $180,978

The $92,000 tied up in the purchase would have grown to this if invested at 7% — this is the true hidden cost of buying that most calculators ignore.

Equity built at year 10

equity = homeValue − remainingMortgage

$537,567 − $274,600

= $262,967

Includes appreciation at 3%/yr and principal paydown from 10 years of payments.

Net buy position at year 10

netBuy = homeValue − mortgageBalance − sellingCosts − opportunityCost

= $537,567 − $274,600 − $32,254 − $180,978

= $49,735

Positive = buying left you ahead. Negative = renting and investing the down payment + monthly savings would have been better.