The comparison almost everyone gets wrong
"My rent is $2,000 and the mortgage would be $2,022, buying is basically the same." That sentence has launched a great many regrettable purchases, and it is wrong in two directions at once.
It understates owning, because a mortgage payment is not the cost of a house. Property tax, insurance and maintenance are real, recurring, and on the default figures here add roughly $815 a month to that $2,022. And it ignores what renting frees up, the $80,000 deposit and $8,000 in fees that a renter still has, and can invest.
The comparison that means something is: which path leaves me wealthier on the day I sell? That is what the table above computes, in both columns, as net wealth.
The 8% that decides short stays
Buying costs about 2% of the price in fees and taxes. Selling costs about 6% in agent commission and legal work. Round it to 8% of the purchase price, spent purely on changing hands. On a $400,000 home that is $32,000, gone, regardless of what the market does.
That number is why the honest answer to "should I buy?" under about five years is almost always no, whatever the rent looks like. Appreciation and equity need time to make back the friction before ownership can pull ahead. Shorten the "years before you sell" field above and watch the verdict flip, that single input moves the answer more than any other.
The inputs that actually swing it
| Input | Why it matters |
|---|---|
| Years before you sell | Dominates everything. Below five, transaction costs usually decide it. |
| Maintenance | 1%/year is the standard rule. Setting it to zero flatters buying by tens of thousands. |
| Investment return | The renter's side of the ledger. A higher return makes renting more competitive. |
| Appreciation | Buying's main engine, and the input people are most over-confident about. |
Two of those four are guesses about the future. Run the calculator three times, pessimistic, expected, optimistic, and if the answer changes, you have learnt the real thing worth knowing: the decision is not robust, and it depends on assumptions nobody can verify. The inflation calculator is useful alongside this, since both the rent and the house price figures are nominal.
What the numbers cannot tell you
A house is not only an asset. Owning buys security of tenure, freedom to alter the property, and release from a landlord's decisions. Renting buys mobility, a predictable monthly cost, and freedom from a boiler that fails in February. Neither appears in any column above.
Use the arithmetic to find out what the financial side of the decision costs, then decide whether the non-financial side is worth that. A result showing renting ahead by $20,000 over ten years does not mean do not buy, it means buying costs about $2,000 a year, and you can judge whether the security is worth that to you. That is a much better question than the one most calculators answer.
If you do buy, the mortgage calculator covers the payment and schedule, and the early payoff calculator shows what overpaying is worth once you are in.