Buy vs rent scenario
Buy vs rent when mortgage rates are low
Lower rates shift more of each payment to principal and lower the cost of owning relative to rent.
After 10 years, buying finishes ahead of renting by about $95,323. On these assumptions buying overtakes renting after about 3.3 years, once selling costs are counted.
Year-by-year results for this scenario
After 10 years, buying finishes ahead of renting by about $95,323. On these assumptions buying overtakes renting after about 3.3 years, once selling costs are counted. The owner's first-month cash cost is $3,496, compared with $2,325 for the renter.
| Year | Home value | Mortgage balance | Buyer net worth | Renter net worth | Buying minus renting |
|---|---|---|---|---|---|
| 1 | $621,000 | $467,727 | $120,599 | $147,740 | −$27,141 |
| 2 | $642,735 | $455,020 | $154,239 | $169,842 | −$15,604 |
| 3 | $665,231 | $441,864 | $189,060 | $192,717 | −$3,657 |
| 4 | $688,514 | $428,245 | $225,104 | $216,393 | $8,711 |
| 5 | $712,612 | $414,144 | $266,038 | $240,904 | $25,134 |
| 10 | $846,359 | $335,812 | $472,500 | $377,178 | $95,323 |
Questions people ask
Does buying beat renting in this scenario?
After 10 years, buying finishes ahead of renting by about $95,323. On these assumptions buying overtakes renting after about 3.3 years, once selling costs are counted.
What changes in this scenario?
Lower rates shift more of each payment to principal and lower the cost of owning relative to rent. 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
- 5% down, 30-year amortization
- 20% down, ten years
- Five-year stay
- Seven-year stay
- Fifteen-year stay
- Full amortization
- Rates at 6.5%
- 4.5% now, 7% at renewal
Educational illustration; not advice. See the assumptions.