Rent vs Own

Renting isn’t throwing money away. Neither is buying.

The honest version of this question isn’t which payment is smaller — it’s where you end up. A down payment left invested earns something too, and a mortgage payment isn’t all cost. This runs both paths from the same cash on the same day and compares net worth at the end. The single biggest thing it turns on is whether the renter actually saves the difference, so that is a switch rather than a hidden assumption.

What this does and doesn’t include Both paths start from the same cash. When the difference is set to be invested, whichever side pays less each month puts the gap away at the assumed return; when it is set to be spent, neither does, and the down payment alone keeps growing. The comparison is net worth rather than payments either way. Owning assumes a sale at the end, after selling costs and the loan payoff. Renting assumes capital gains tax on portfolio growth. Property tax follows California’s Prop 13 cap on assessed value rather than tracking market value, which most national calculators get wrong here. What it deliberately leaves out. The loan is assumed to run at the same rate for the whole period — no refinance, no rate-and-term change, no cash-out. In practice most owners refinance at least once, and a lower rate would improve the owning side against everything shown here. Rent is assumed to rise every year with no gaps, no moves and no concessions. Neither side accounts for a job change, a move out of the area, or a period of vacancy. This is an educational estimate built on 2026 federal figures, not tax advice — confirm anything you rely on with a CPA.