When you buy a home, your down payment and closing costs are no longer available to invest. This calculator shows the opportunity cost — what that money would grow to in an investment account at your expected return rate. Compare the investment path to home equity to see which builds more wealth over your time horizon.
Opportunity cost is the value of the next-best alternative you give up when making a choice. When you use $80,000 as a down payment, the opportunity cost is what that $80,000 would have grown to in an investment account. This doesn't mean buying is wrong — it means comparing the full financial picture of each path.
The S&P 500 has historically returned about 10% annually in nominal terms and 7% in real (inflation-adjusted) terms over long periods. A diversified stock/bond portfolio might average 5–7% nominally. Use a conservative estimate that reflects your actual investment approach, not just the best-case scenario.
Use the Rent vs Buy Calculator for a full comparison. In general, home equity grows through both appreciation and principal paydown, while investment growth depends on market returns. Homes typically appreciate 3–4% annually nationally, which is lower than stock market returns — but you also get to live in the home.
If renting is cheaper than owning in the short term, you could invest the monthly difference. Enter that amount as the monthly contribution to model the renter's investment portfolio. The Rent vs Buy Calculator does this automatically as part of the full comparison.