How the Rent vs Buy: 8-Year Total Cost Calculator Works
Korea's jeonse system — putting down a large lump-sum deposit instead of paying monthly rent, then getting it back in full at lease-end — has no U.S. equivalent. American renters pay monthly rent and typically a small security deposit, so comparing "rent vs buy" in the U.S. means comparing an ongoing rent payment against a mortgage, not a deposit-based lease. This calculator handles that comparison properly, weighing 8 years of total cost for each path.
The cost of renting is your total rent paid over 8 years (with annual increases compounding) minus the investment gains you'd earn by putting the money that would've been your down payment into the market instead. The cost of buying is mortgage interest plus annual holding costs (property tax, homeowner's insurance, and maintenance) plus the opportunity cost of tying up your down payment in the house, minus whatever the home appreciates in value over those 8 years. Whichever total is lower is the financially better move under your assumptions.
This model simplifies a few things: it treats the mortgage as interest-only rather than amortizing (so it doesn't account for the equity you'd build through principal paydown), and it doesn't include one-time costs like closing costs or realtor commissions on either side. Because the outcome is highly sensitive to your appreciation-rate and investment-return assumptions, it's worth running this a few times with different numbers rather than trusting a single result.
Frequently Asked Questions
No. Jeonse — paying a large lump-sum deposit instead of monthly rent, refunded in full at lease-end — doesn't exist in the U.S. rental market. U.S. renters pay monthly rent plus a small security deposit (often just one month's rent), so this calculator compares monthly rent against buying, not a deposit-based lease.
Renting's cost is your total rent paid over 8 years, minus the investment growth you'd get by investing the down-payment-equivalent cash instead. Buying's cost is mortgage interest plus holding costs (property tax, insurance, maintenance) plus the opportunity cost of your down payment, minus the home's price appreciation.