Buy vs. invest: what if you rented and invested the difference?
Enter a home's price, down payment, rate, and term — plus the rent for a similar home — and we'll show how much you could invest instead of buying, and what it might grow to at a conservative return.
Estimate only, for US planning. This compares the cash flow of owning (principal & interest) vs. renting and investing the difference; it does not count the home equity or appreciation a buyer builds, nor property tax, insurance, or maintenance. For the full picture, use the Rent vs. Buy Calculator. Not financial advice.
"Rent and invest the difference" — does it actually work?
The case for buying is that a mortgage forces you to save: every payment builds equity. But buying also locks up a big down payment and ties you to one asset. The alternative argument is simple — rent something comparable, invest the money you would have sunk into buying, and let compounding do the work. This calculator estimates that investing side.
You invest the down payment up front, then each month invest the difference between the mortgage payment and your rent. We grow that at your chosen return over the loan term. If owning would cost more per month than renting, the renter has more to invest — and that gap compounds.
Why we default to a conservative ~6%
The S&P 500's long-run nominal average is around 10%, but most firms expect lower returns over the coming decade from today's valuations. Schwab's 2026 outlook is about 5.9% annualized for US large-caps; planning guides commonly suggest ~6%. Using a conservative number keeps the comparison honest — you can slide it up or down to see the range.
The honest caveat
This tool shows only the investing side. A buyer also builds home equity and may benefit from appreciation, while a renter faces rising rents over time. It also leaves out property tax, insurance, and maintenance — costs the renter avoids, which would actually increase the amount they could invest. For a complete owner-vs-renter comparison with equity and appreciation, use our Rent vs. Buy Calculator.
- Buying tends to win the longer you stay, as equity builds and you escape rising rents.
- Renting & investing tends to win when you move often, when buying is far more expensive than renting, or when markets are strong.
- Discipline is everything: the strategy only works if you truly invest the difference instead of spending it.
Curious about the ownership path instead? See your payment and payoff with the Mortgage Payoff Calculator and what your home might be worth with the Home Value Estimator.