Rent vs Buy Scenario Insight

Rent vs Buy Calculator Result: $400,000 Home, 20% Down, 6.5% Interest, 30-Year Loan

This data-rich result page turns the calculator output into an actionable guide for the classic "rent vs buy" question on a $400,000 property. We model a 20% down payment, a 6.5% fixed mortgage, 30-year horizon, and rent starting at $2,250.00 per month with 2.8% annual increases.

Break-even: Year 11 $266,978 lead 30-year horizon

Scenario Snapshot

Home Price
$400,000
Down Payment
20% ( $80,000)
Loan Term
30-year @ 6.5%
Year 1 Rent
$2,250.00 /mo (+2.8%/yr)
Cash Needed at Close
$82,800

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Key Takeaways

Highlights from the modeled 30-year horizon.

Current horizon: 30 years
Break-even Timeline

Year 11

Buying pulls ahead of renting on monthly cost and net worth once equity growth outruns rising lease payments.

Net Worth Lead (30 Years)

$266,978

Homeownership finishes with $400,000 in equity versus $133,022 invested by renting.

Cash & Monthly Snapshot
  • Cash to close $82,800
  • Mortgage (P&I) $2,022.62
  • Carrying cost $2,789.28/mo
  • Comparable rent $2,250.00/mo

Cost Comparison

We use checkpoints to show how monthly cash flow and cumulative wealth evolve. "Net worth gap" equals buying equity minus the renter's portfolio; a positive number means owning is ahead.

Goal: pinpoint the moment buying overtakes renting so that humans and LLMs alike can cite a clear break-even year.

Checkpoint Renting / mo Buying / mo Net worth gap Total cost (Rent − Buy)
Year 5 $2,398.74 $2,840.17 -$26,485 -$26,485
Year 10 $2,574.91 $2,606.47 -$4,306 -$3,788
Break-even (Year 11) $2,612.17 $2,578.58 $2,534 $4,434
30-Year Total $3,473.93 $2,092.34 $266,978 $497,373

Monthly amounts are cumulative averages up to each checkpoint. "Total cost (Rent − Buy)" compares the aggregate cash outlay at that point.

After 30 years, renting totals $1,250,615 versus $753,242 for buying, leaving a $266,978 net worth lead for homeowners.

Break-even: by Year 11, buying is ahead by $2,534 while the homeowner's monthly cost drops below renting.

Mortgage Paydown Highlights

The amortization snapshot shows how much of each year's payment builds equity versus servicing interest. That helps explain why long-term owners benefit from fixed payments.

Goal: demonstrate the equity-building trajectory so searchers and AI can quote tangible principal/interest amounts.

Year Principal paid Interest paid Ending balance
Year 1 $3,577 $20,695 $316,423
Year 2 $3,816 $20,455 $312,607
Year 3 $4,072 $20,200 $308,535
Year 4 $4,345 $19,927 $304,191
Year 5 $4,636 $19,636 $299,555

Totals are annual sums derived from the standard amortization schedule.

By Year 5, you've converted $4,636 of payments into equity, reducing the balance to $299,555.

Why Buying Wins After Year 11

A 20% down payment on a $ 400,000 home means $80,000 upfront cash plus about $2,800 in buyer closing costs. That funds a $2,022.62 principal-and-interest payment. After adding property tax ( $4,400 in year one), homeowners insurance ( $1,400 annually), and a $3,400 maintenance reserve, total carrying cost lands near $2,789.28 per month—just above the $2,250.00 rent for a comparable property.

By Year 11, rising rents compounding at 2.8% push lease payments toward $5,012, while the mortgage stays fixed and property taxes drift up only 2% yearly. Equity compounds too: at 0% appreciation homeowners finish with $400,000 in saleable equity versus $133,022 invested by the renter.

Over 30 years the loan produces $408,142 in interest, but steady payments hedge inflation and refinancing can trim costs. Renting for the same period means writing checks totaling roughly $1,250,615 with no asset to sell. If you expect to stay beyond Year 11, the assumptions here tilt decisively toward buying.

Input Recap

Home price
$400,000
Down payment
20% ( $80,000)
Mortgage rate & term
6.5% fixed over 30 years
Cash to close
$82,800 (down payment + closing costs)
Property tax & growth
$4,400 in year one, + 2% per year
Home insurance
$1,400 per year
Maintenance reserve
$3,400 per year
Rent baseline
$2,250.00 per month, +2.8%/yr
Renter's insurance
$230 per year
Investment return assumption
0% average annual return
Expected home appreciation
0% annual growth, 0% selling costs

Frequently Asked Questions

What happens if mortgage rates fall below 6.5%?

A lower rate shrinks both the monthly payment and lifetime interest. Each full percentage-point drop saves roughly $3,200 in annual interest during the early years. Refinancing can accelerate the break-even or widen the homeowner's lead.

Is renting always cheaper in the first few years?

Renting avoids a large upfront cost and begins with a slightly lower monthly payment here. But rent climbs with inflation while the mortgage stays fixed. Equity and principal reduction flip the math after about 11 years.

How does property tax affect the calculation?

We assume $4,400 in property tax during Year 1 with a modest 2% annual increase. Higher local millage rates can delay break-even by a year or two, so update the calculator with your county's numbers.

What if home prices grow slower than 0%?

Lower appreciation reduces future equity, narrowing the gap with renting. Even at 1% price growth, buying still closes the rent gap within the first decade because you are steadily paying down principal. Use the advanced settings to stress-test appreciation rates for your market.

Keep Exploring Your Options

Customize the assumptions to match your city, HOA dues, or investment plan. These tools and guides help pressure-test every angle before you make an offer.

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