"Should I rent or buy?" is usually answered with a gut feeling about building equity. The real answer depends on a number most rules of thumb skip entirely: what your down payment would have earned if you'd invested it instead.
Rent vs buy break even calculator, why it's a simulation and not a formula
Buying involves one-time costs (closing costs going in, selling costs coming out) that only pay off once home appreciation and years of equity-building outweigh them. This calculator runs an actual month-by-month simulation — mortgage amortization, home appreciation, rent increases — rather than a single static formula, because the interactions between them shift every month.
Opportunity cost of down payment calculator, the piece most tools skip
On a $400,000 home with 20% down ($80,000) at 6.5% over 30 years, compared against $2,000/month rent, 3% appreciation, and a 6% investment return: after 7 years, buying builds $173,101 in home equity — but investing that down payment (plus the monthly cash-flow difference) would have grown to $216,328. Renting comes out about $43,227 ahead over that horizon.
Buy vs rent net worth calculator, when buying catches up
This doesn't mean buying is always worse — it means the comparison is horizon-dependent. Extend the same numbers to 15 or 20 years, and accumulated equity plus appreciation typically overtakes the invested down payment. Try different year counts in the calculator to see where your own numbers cross over.
