Compare the true long-term cost of buying a home versus renting — including mortgage, taxes, maintenance, and the opportunity cost of your down payment.
Buying costs include: mortgage payments, property tax (grows with home value), home insurance & maintenance (grow with appreciation), HOA fees, and the opportunity cost of your down payment — what it could have earned if invested at your assumed return rate.
Selling costs (agent fees, transfer tax, etc.) are deducted from the final home value in the net cost calculation.
Renting costs include monthly rent (growing at your rent-increase rate), renter's insurance, and upfront costs. The security deposit is returned at the end of the term.
Net cost is the total money you end up spending after accounting for the home you own (buy) or the rent you've paid (rent). A lower number means less money spent overall.
💡 Tip: The crossover year is when buying becomes cheaper than renting on a cumulative basis. Before this point, renting may be financially advantageous.