Buy vs rent with 5% down: a first-time buyer case

A first-time buyer with the minimum down payment, an insured mortgage and a 30-year amortization. The insurance premium and slow equity build make this the hardest case for buying in the early years.

After 10 years, buying finishes ahead of renting by about $18,249. On these assumptions buying overtakes renting after about 8.3 years, once selling costs are counted.

Year-by-year results for this scenario

After 10 years, buying finishes ahead of renting by about $18,249. On these assumptions buying overtakes renting after about 8.3 years, once selling costs are counted. The owner's first-month cash cost is $3,458, compared with $2,025 for the renter.

Net worth by year (nominal dollars)
Year	Home value	Mortgage balance	Buyer net worth	Renter net worth	Buying minus renting
1	$517,500	$486,906	$881	$50,643	−$49,762
2	$535,612	$478,497	$26,737	$70,674	−$43,937
3	$554,359	$469,704	$53,587	$91,417	−$37,829
4	$573,762	$460,512	$81,471	$112,898	−$31,427
5	$593,843	$450,901	$115,501	$135,147	−$19,647
10	$705,299	$395,875	$277,302	$259,053	$18,249

Questions people ask

Does buying beat renting in this scenario?

After 10 years, buying finishes ahead of renting by about $18,249. On these assumptions buying overtakes renting after about 8.3 years, once selling costs are counted.

What changes in this scenario?

A first-time buyer with the minimum down payment, an insured mortgage and a 30-year amortization. The insurance premium and slow equity build make this the hardest case for buying in the early years. All other inputs keep the calculator’s default planning values.

Is this a forecast?

No. It is an illustration of how one assumption changes the buy vs rent comparison. Replace the inputs with your own numbers.

Other buy vs rent scenarios

Educational illustration; not advice. See the assumptions.