Buy vs. Rent Financial Arbitrage
Compare 30-year net worth trajectories: Home equity accumulation vs. down payment invested in index funds.
Property & Loan Parameters
Renting & Market Return
Net Worth Trajectory Comparison
Net equity built through homeownership vs. accumulated portfolio from investing the down payment and monthly savings:
| Year | Buyer Net Equity | Renter Portfolio | Advantage (Buy - Rent) |
|---|---|---|---|
| Year 1 | $70,857 | $106,198 | -$35,341 (Rent) |
| Year 2 | $86,291 | $120,848 | -$34,556 (Rent) |
| Year 3 | $102,330 | $135,966 | -$33,636 (Rent) |
| Year 4 | $119,001 | $151,570 | -$32,570 (Rent) |
| Year 5 | $136,332 | $167,680 | -$31,348 (Rent) |
| Year 6 | $154,354 | $184,315 | -$29,960 (Rent) |
| Year 7 | $173,101 | $201,496 | -$28,395 (Rent) |
| Year 8 | $192,604 | $219,244 | -$26,640 (Rent) |
| Year 9 | $212,901 | $237,583 | -$24,682 (Rent) |
| Year 10 | $234,029 | $256,538 | -$22,509 (Rent) |
How Opportunity Cost Works
When you buy, your down payment and closing costs are locked into non-liquid home equity, and you pay mortgage interest, property tax, maintenance, and insurance. When you rent, you invest that down payment upfront in index funds and invest any monthly savings difference.
Break-even logic: Buying typically lags in early years due to closing costs and upfront interest, but gains advantage later as loan amortization accelerates and rent compounds.
Automated Custom Index & Portfolio Investing
Build custom automated investment pies, automate recurring portfolio rebalancing, and invest down-payment reserves.
Illustrative only. Not financial advice. ExitYear is a private, client-side financial projection engine licensed strictly for personal, non-commercial use. Commercial use and financial advisor client engagements are strictly prohibited under our Terms of Service. Projections are deterministic mathematical simulations based solely on user assumptions, use simplified tax heuristics, and omit market volatility, sequence of returns risk, and individualized circumstances. Some links may be sponsored affiliate recommendations where we earn a commission at no additional cost to you. Do not use ExitYear to make financial decisions. Consult a qualified, licensed professional.