How long you plan to live there
Historical average: 3-4%
Expected return if you invested instead
Charitable donations, etc. (excl. mortgage & SALT)
Opportunity Cost
If you rent, your down payment and closing costs are invested instead. Plus any monthly savings (if rent is cheaper than owning) get invested.
Tax-Aware
Only counts mortgage interest tax deduction if your itemized deductions (mortgage interest + property tax up to $10K + other) exceed the standard deduction.
True Cost of Buying
Includes all costs: mortgage interest, property tax, insurance, maintenance, HOA, buying closing costs, and selling costs when you leave.
Net Worth Comparison
Buy scenario: home equity minus selling costs. Rent scenario: investment portfolio value. Breakeven is when buy net worth exceeds rent.
After 10 years, you're better off
Renting
by $19K in net worth
Breakeven Point
>10 years
Buying doesn't win in this timeframe
Buy: Final Net Worth
$293K
Home equity after selling costs
Rent: Final Net Worth
$312K
Investment portfolio value
Comparing wealth accumulation: home equity vs invested down payment
True out-of-pocket costs each year (not including equity/investments)
How the breakeven point changes with different assumptions
| Variable | Low | Base | High |
|---|---|---|---|
| Home Appreciation | 1% Never | 3% Never | 5% Year 4 |
| Investment Return | 5% Year 8 | 7% Never | 9% Never |
| Rent Increase | 2% Never | 3% Never | 5% Year 9 |
"Never" means buying doesn't break even within 10 years at that assumption
Opportunity Cost Investment
(Down payment + buying closing costs invested instead)