Buy vs rent scenario
Buy vs rent with 20% down over ten years
A conventional purchase with 20% down and a ten-year plan, the baseline case most people mean when they search for buy vs rent.
After 10 years, buying finishes ahead of renting by about $41,686. On these assumptions buying overtakes renting after about 5.7 years, once selling costs are counted.
Year-by-year results for this scenario
After 10 years, buying finishes ahead of renting by about $41,686. On these assumptions buying overtakes renting after about 5.7 years, once selling costs are counted. The owner's first-month cash cost is $3,757, compared with $2,325 for the renter.
| Year | Home value | Mortgage balance | Buyer net worth | Renter net worth | Buying minus renting |
|---|---|---|---|---|---|
| 1 | $621,000 | $469,303 | $117,835 | $150,940 | −$33,105 |
| 2 | $642,735 | $458,120 | $149,966 | $176,418 | −$26,452 |
| 3 | $665,231 | $446,428 | $183,341 | $202,855 | −$19,514 |
| 4 | $688,514 | $434,203 | $218,008 | $230,289 | −$12,281 |
| 5 | $712,612 | $421,423 | $258,759 | $258,763 | −$4 |
| 10 | $846,359 | $348,248 | $460,065 | $418,379 | $41,686 |
Questions people ask
Does buying beat renting in this scenario?
After 10 years, buying finishes ahead of renting by about $41,686. On these assumptions buying overtakes renting after about 5.7 years, once selling costs are counted.
What changes in this scenario?
A conventional purchase with 20% down and a ten-year plan, the baseline case most people mean when they search for buy vs 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
- Five-year stay
- Seven-year stay
- Fifteen-year stay
- Full amortization
- Rates at 6.5%
- Rates at 3.5%
- 4.5% now, 7% at renewal
Educational illustration; not advice. See the assumptions.