Below is a comparison between renting and owning over a 5-year period. Let’s assume the home value appreciates at a rate of 3% per year, which is a modest estimate. For the mortgage, we’ll assume it’s a fixed-rate mortgage, so the payment stays constant, and part of each payment goes towards the principal, building equity. The rent will also increase by 2% annually, which is common to account for inflation and market conditions.
| Year | Total Rent Payments | Total Mortgage Payments | Home Value | Equity Accumulated |
| 1 | $30,000 | $36,000 | $515,000 | $15,000 |
| 2 | $61,200 | $72,000 | $530,450 | $32,450 |
| 3 | $93,624 | $108,000 | $546,364 | $52,364 |
| 4 | $127,296 | $144,000 | $562,755 | $74,755 |
| 5 | $162,242 | $180,000 | $579,638 | $99,638 |
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