Rent vs Buy Calculator

Should you rent or buy? For healthcare professionals the question often comes up at the worst time: right before residency, fellowship or a first job, when you don't know how long you'll stay. This calculator compares the two the fair way — by looking at your net worth at the end of each path, including every cost of owning and the investment growth a renter could earn instead.

What this calculator does

Enter the home price, down payment, mortgage rate, years you'll stay, monthly rent for a similar home, rent increases, home appreciation, yearly ownership costs, and the costs to buy and sell. Add the return you'd earn on money you invest instead. It shows:

• which choice leaves you better off over your timeline,
• by how much,
• each path's net worth at the end, and
• how many years it takes for buying to come out ahead.

The chart shows both paths year by year.

The formula in plain English

Buyer. Each year the buyer pays the mortgage plus property tax, insurance and maintenance (the yearly cost as a percentage of the home's value). The home grows in value. At the end, the buyer's net worth is the home's value minus selling costs minus the remaining mortgage.

Renter. The renter starts by investing the money they didn't spend on the down payment and closing costs. Each year, if owning would have cost more than renting, the renter invests the difference; if renting costs more, the renter draws down. That portfolio grows at your chosen return.

Breakeven is the first year the buyer's net worth passes the renter's.

Two worked examples

An expensive market. A $550,000 home with 10% down at 6.4%, versus $2,800 a month in rent. Ownership costs run 2.5% a year, and both rents and prices rise 3%.

• After 3 years, renting and investing leaves you about $50,000 ahead.
• Even after 12 years, renting is still ahead. Buying doesn't win until about year 22.

A market where rents are high compared with prices. A $450,000 home versus $3,000 a month in rent, with 2% yearly ownership costs and 3.5% growth in rents and prices.

• Buying pulls ahead by about year 3.
• After 7 years, the buyer is about $79,000 ahead.

The answer depends far more on the ratio of price to rent, and on how long you'll stay, than on any general rule.

Why it matters at each career stage

If you're: Student

Students almost always rent. Use this calculator to see why a short stay rarely favors buying — the costs of buying and selling take years to recover.

If you're: Resident / fellow

A three- to five-year residency is often too short to make buying worthwhile, unless prices are low compared with rent and you're fairly sure you'll stay. If you might match into a fellowship elsewhere, renting keeps you flexible.

If you're: Employed

If you're settling into a long-term job, buying often makes sense, but test a range of appreciation rates. If buying only wins with optimistic assumptions, renting a few more years is a reasonable choice.

If you're: Practice owner

Practice owners often stay put for decades, which favors buying. Just keep enough cash for the practice too.

What the numbers don't capture

Owning brings stability, control and the ability to make a place your own. Renting brings flexibility, less maintenance and less risk if you have to move. Both are legitimate priorities — the calculator just makes sure you know what each one costs.

Estimate a payment with the physician mortgage calculator, see how investing the difference grows with the compound growth calculator, and read our guide to buying a home in healthcare.