Rent vs buy a $250k house
Over 30 years, buying a $250k home comes out about $89,742 ahead — comparing buying (20% down, $50,000) against renting at $1,250/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 $50,000 down payment. The renter invests it (and any monthly difference) at 7%; the buyer puts it into a $250k home appreciating 3%/yr with a 30-year mortgage. In today's dollars:
| Age | Rent & invest | Buy |
|---|---|---|
| 30 | $72,110 | $69,866 |
| 35 | $206,719 | $214,489 |
| 40 | $369,576 | $388,549 |
| 45 | $566,609 | $598,310 |
| 50 | $804,990 | $851,333 |
| 55 | $1,093,397 | $1,156,745 |
| 60 | $1,442,326 | $1,532,069 |
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 $250k home is compared to $1,250/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.
Why the answer usually hinges on how long you stay
Buying's up-front and exit costs are spread across the years you own the place, so the longer you stay, the more each year dilutes them. A common planner's shorthand is the five-year rule: stay less than roughly five years and renting often wins, because you haven't owned long enough to earn back the cost of buying and later selling; stay beyond it and ownership's math tends to pull ahead as those fixed costs fade and equity builds.
It's a guideline, not a law. A market where homes are pricey relative to rents pushes the break-even further out; a cheap-to-own market pulls it in. But the shape of the rule holds: the real question isn't can I afford the payment so much as how confident am I that I'll still be here in five-plus years.
A likely job move, an uncertain relationship, or a growing family that will outgrow the place all argue for waiting. If you're genuinely confident you'll stay put, the case for buying strengthens with every year you hold.
Common questions
Is it better to rent or buy a $250k house?
Over 30 years in this projection, buying comes out about $89,742 ahead — buying ends around $1,532,069 vs renting-and-investing around $1,442,326. 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 $250k house?
A 20% down payment is about $50,000, 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."