Rent and Invest vs Buy Calculator

Is it better to rent and invest or buy a house?

With typical US numbers, renting and investing comes out modestly ahead of buying, by about $41,000 after 10 years on a $420,000 home. That only holds if you invest the whole down payment and every dollar of monthly savings, and earn around 7% a year after tax. Spend half the monthly savings, or earn 5% instead of 7%, and buying wins. This rent and invest vs buy calculator shows exactly where that line sits for your situation.

“Rent and invest the difference” is a real strategy, not a myth. But it’s a two-part promise. Part one is cheaper housing. Part two is investing the savings without fail, through every market crash, for years. The calculator assumes you keep both parts. This page shows what happens if you don’t.

How this calculator models renting and investing

The comparison uses a same-cash-flow rule. Both households spend the same total amount each month. They differ only in where the money goes.

1. Day one: the buyer spends the down payment and closing costs on the house. The renter invests that same amount.
2. Every month: whoever has the lower housing cost invests the difference at the investment return.
3. At the horizon: the buyer’s net worth is home equity after selling costs, plus any investments they made. The renter’s net worth is their portfolio.

The investment return input should be your after-tax, after-fee expected return. The default is 7%. Inputs that matter most for this page:

• Investment return, set to match the portfolio you’d really hold.
• Appreciation, which is your home’s “return”.
• Mortgage rate, which sets the buyer’s cost of borrowing.
• Rent and rent growth, which decide how much the renter has left to invest each month.

Worked example: renting and investing vs buying with US defaults

Upfront. The buyer puts 20% down on a $420,000 home ($84,000) and pays $12,600 in closing costs. The renter invests $96,600 in a portfolio instead.

Monthly. The buyer’s mortgage is about $2,080. That’s a $336,000 loan at 6.3% over 30 years, worked out with the standard amortization formula. With property tax, insurance and maintenance, owning costs about $3,007 in month one, against $2,115 for rent and renter’s insurance. The renter invests the $892 difference.

How the gap changes over time. The mortgage payment is fixed, while rent rises 3.5% a year, so the renter’s monthly savings shrink each year. Property tax, insurance and maintenance also rise with the home’s value, which slows that shrinking. Around year 18, rent overtakes the owner’s total cost, and from then on the owner is the one investing the difference.

After 10 years. The renter’s portfolio is about $315,000. The owner’s home is worth about $592,000, with about $283,000 left on the mortgage. After 6% selling costs, the owner’s equity is about $273,500. The renter-investor leads by roughly $41,000.

How much does investing discipline matter?

This is the key question the “rent and invest” debate usually skips. We re-ran the US defaults with the renter investing only part of the monthly savings. The down payment is still invested in full in every case.

Investing half the monthly savings is enough to flip the result. Over 20 years the forced saving built into a mortgage is worth more than $200,000 to someone who wouldn’t invest otherwise. In practice, renting and investing works when:

• an automatic transfer moves the savings into investments on payday;
• the money goes into accounts you can’t easily spend from, such as retirement accounts;
• you keep investing through downturns and don’t sell when markets fall;
• rent increases come out of your spending money, not your investment contributions.

If that doesn’t describe you, the default result overstates the case for renting.

How much does the investment return matter?

The return is the renter’s equivalent of home appreciation, and it’s just as uncertain. With everything else at the defaults, over 10 years:

A higher return makes renting more attractive, because the down payment and monthly savings earn more. But a higher expected return comes with more volatility. A 7% average can include a 30% fall in a bad year. A home’s value usually moves more slowly, although it is leveraged.

What should the renter actually invest in?

The calculator’s investment return is one number, but you have to earn it with a real portfolio. A few principles keep the rent and invest strategy honest:

• Match the return to the portfolio. A 7% long-run assumption fits a portfolio that’s mostly stocks. If you hold a 60/40 mix of stocks and bonds, or keep a lot of cash, enter a lower figure.
• Keep costs low. Broad, low-cost index funds keep more of the return than high-fee products. A 1% annual fee takes about a seventh of a 7% return.
• Use tax-advantaged accounts first. Retirement accounts let the renter’s savings grow without yearly tax drag, which brings the after-tax return closer to the before-tax one.
• Keep the down payment money separate. If you might still buy in a few years, the money for the down payment shouldn’t be in volatile assets. Money you’ll need within about five years usually belongs in safer investments, which earn less. Lower the investment return to match.
• Rebalance and leave it alone. The calculator assumes a smooth return every year. Real markets don’t work like that, and the strategy only works if you don’t sell after a fall.

If you’re keeping the money ready for a possible purchase in the next couple of years, you’re really saving for a down payment, not following a long-term rent and invest plan. Model it that way by using a lower return.

Buying a house vs investing: the trade-offs the numbers hide

The US capital gains exclusion for a main home is worth noting. If you meet the ownership and use tests, the IRS lets you exclude up to $250,000 of gain, or $500,000 for married couples filing jointly. That narrows the after-tax gap between a home and a taxable brokerage account. The calculator doesn’t model taxes, so allow for it by using an after-tax investment return.

For a full explanation of what the down payment gives up, read the opportunity cost of a down payment.

Rent and invest vs buy calculator: decision checklist

• Would you really invest the difference every month? Be honest. If not, run the numbers as if you’d invest only half.
• What return are you assuming? Use after-tax, after-fee returns for the portfolio you actually hold.
• What’s the price-to-rent ratio where you live? High ratios (expensive homes relative to rent) favour renting and investing.
• Can you handle market swings? Selling during a crash wrecks the renter’s plan.
• Is your rent stable? Large rent increases eat into what you can invest.
• How long is your horizon? Short stays favour renting because of transaction costs.

Related tools and guides

• Renting and investing vs buying a house: the long-form guide to this strategy.
• Rent vs own calculator: the same model, focused on how long you stay.
• United States rent vs buy calculator: US defaults and notes.
• Is renting better than buying?: when renting is the right long-term choice.
• Methodology: how the same-cash-flow comparison works.

This is an educational model, not investment advice. Returns are not guaranteed.

This calculator is for education and planning. It is not financial advice. Defaults for United States are illustrative late-2026 estimates; check current rates and fees locally.