How this number is made
Renting and buying spend cash on different schedules. This comparison adds the rent you would pay, and it adds the cash of owning minus a credit for equity at the end. It is not a forecast.
- Use a stay long enough that selling costs would not erase the comparison. They are not deducted here.
- Owner costs are tax, insurance, and a maintenance reserve. Principal and interest are calculated.
Formula
Rent cost grows each year. Owner cash = down + closing + mortgage payments + owner costs × years. Equity credit = appreciated price − remaining loan. Net owning cost = owner cash − equity credit.
Worked example
With the figures already in the form, owning ahead of renting, after equity is $77,368.
Questions
Where are repairs and selling costs?
Repairs belong in the yearly owner figure if you want them. Selling costs are not subtracted from the equity credit. A short stay looks better here than it will at a closing table.
Does this include the tax deduction?
No. Mortgage interest may or may not beat the standard deduction. That depends on the rest of your return.