Rent vs buy a $200k house
Over 30 years, buying a $200k home comes out about $53,654 ahead — comparing buying (20% down, $40,000) against renting at $1,000/month and investing the down payment plus any monthly savings. Both paths start with the same money; the difference is where it goes.
Net worth over time: rent vs buy
Both start at age 30 with enough for the $40,000 down payment. The renter invests it (and any monthly difference) at 7%; the buyer puts it into a $200k home appreciating 3%/yr with a 30-year mortgage. In today's dollars:
| Age | Rent & invest | Buy |
|---|---|---|
| 30 | $65,110 | $63,003 |
| 35 | $214,461 | $218,613 |
| 40 | $395,154 | $406,150 |
| 45 | $613,766 | $632,381 |
| 50 | $878,255 | $905,481 |
| 55 | $1,198,247 | $1,235,325 |
| 60 | $1,585,391 | $1,639,044 |
What actually drives the answer
Rent vs buy is rarely about "throwing money away on rent." It hinges on a handful of levers this projection captures:
- Price-to-rent ratio. Here a $200k home is compared to $1,000/month rent. Where rent is cheap relative to prices, renting-and-investing can win; where buying is cheap relative to rent, owning pulls ahead.
- How long you stay. Buying carries big upfront costs (down payment, closing) that take years to earn back. The crossover in this scenario is around age 32. Move sooner and renting often wins.
- The invested difference. Renting only wins if you actually invest the down payment and monthly savings — not spend them. This model assumes you do.
Assumptions: 20% down, 6.5% mortgage, 30-yr term, 3% home appreciation, 1.1% property tax, 7% investment return, 3% inflation, single filer, no-income-tax state. Your local prices, rent, and how long you'll stay change the answer — model yours in the calculator.
The costs that don't show up in the mortgage payment
On a modest home like this, the sticker price makes buying look cheap next to rent, but the transaction and upkeep costs are what quietly reshape the math. Closing costs run a few percent of the price when you buy, and selling typically costs around six percent in agent commissions plus fees. Those are largely fixed drags you pay whether or not the home appreciates.
Then there's maintenance, which tends to run near one percent of the home's value every year. A roof, a water heater, and a furnace all arrive eventually, and on an older, lower-priced home they can arrive sooner. Add property taxes, insurance, and any HOA dues, and the true monthly cost of owning sits well above the principal-and-interest figure a loan calculator shows.
None of this means buying loses. It means the comparison only works when you weigh owning's full carrying cost, not just the loan payment, against the rent. On a cheaper home the fixed costs of buying and selling are a larger share of the price, so they take longer to earn back.
Common questions
Is it better to rent or buy a $200k house?
Over 30 years in this projection, buying comes out about $53,654 ahead — buying ends around $1,639,044 vs renting-and-investing around $1,585,391. It flips based on how long you stay, local price-to-rent, and whether you actually invest the difference.
How much do you need to buy a $200k house?
A 20% down payment is about $40,000, plus closing costs. Less than 20% down usually adds PMI. Renting frees that cash to invest instead — which is the core of the trade-off.
Does renting really mean throwing money away?
No. Rent buys housing without the costs of ownership (property tax, maintenance, transaction costs), and the down payment can be invested. Buying builds equity but ties up cash and assumes appreciation. Neither is automatically "throwing money away."