Why net worth beats "monthly payment vs rent"
Comparing a mortgage payment to rent ignores half the picture: the buyer builds equity and pays transaction costs, while the renter keeps the down payment invested. Net worth at the moment you'd move captures all of it in one number.
Every assumption, in the open
Defaults are national-median starting points, not predictions. Change any of them — the result updates instantly and nothing else is hidden in the math.
- • Home price $420,000 — near the 2025 US median existing-home sale price (NAR).
- • Mortgage rate 6.5% on a 30-year fixed — in line with Freddie Mac PMMS averages in 2025–2026.
- • Home appreciation 3.5%/yr and rent growth 3.5%/yr — close to long-run FHFA HPI and CPI shelter averages.
- • Property tax 1.1% of value and maintenance 1% of value per year — common planning rules of thumb; check your county rate.
- • Insurance $1,900/yr — roughly the national average homeowners premium; coastal states run far higher.
- • Closing costs 3% to buy, 6% to sell (agent commission + transfer costs).
- • Investment return 6%/yr on the money the renter doesn't spend on the house — a conservative diversified-portfolio figure.
- • Excluded: mortgage interest deduction, capital-gains taxes, PMI. Most households take the standard deduction, and the $250k/$500k home-sale exclusion covers most sellers.
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Read the guideFAQ
Is renting throwing money away?
No. Mortgage interest, property tax, insurance and maintenance are also unrecoverable costs. The calculator counts both sides' unrecoverable costs and lets the cheaper side invest the difference.
Why is the mortgage interest deduction excluded?
Since the 2017 standard deduction increase, roughly 90% of filers don't itemize, so the deduction rarely changes the answer. If you itemize, buying looks slightly better than shown.
What's the single most important input?
Years you'll stay. Transaction costs of about 9% of the price are fixed, so short stays almost always favour renting.
For the long-run version of this question, the Dave Ramsey investment calculator compounds it to age 65.
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