Rent vs buy a $275k house
Over 30 years, buying a $275k home comes out about $125,229 ahead — comparing buying (20% down, $55,000) against renting at $1,400/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 $55,000 down payment. The renter invests it (and any monthly difference) at 7%; the buyer puts it into a $275k home appreciating 3%/yr with a 30-year mortgage. In today's dollars:
| Age | Rent & invest | Buy |
|---|---|---|
| 30 | $75,310 | $73,297 |
| 35 | $200,864 | $212,426 |
| 40 | $352,765 | $379,748 |
| 45 | $536,544 | $581,275 |
| 50 | $758,889 | $824,259 |
| 55 | $1,027,895 | $1,117,455 |
| 60 | $1,353,351 | $1,478,581 |
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 $275k home is compared to $1,400/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 31. 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.
Let the price-to-rent ratio tell you which market you're in
The single most useful number for this decision isn't the price. It's the price divided by a full year of rent for a comparable place nearby. A low ratio means homes are cheap relative to rents, and buying tends to win sooner. A high ratio means you're paying a steep premium to own, and renting while investing the difference often comes out ahead. Two towns with the same price tag can sit on opposite sides of that line depending on what rent costs locally.
- Take the price of a home and divide it by the annual rent for a similar one in the same area.
- A low ratio, in the mid-teens or below, leans toward buying.
- A high ratio, up into the twenties, leans toward renting and investing the gap.
Treat it as a compass, not a verdict. The ratio tells you which way the wind is blowing before you factor in how long you'll stay and your own tax situation, but it reframes the choice around your local market rather than a national headline about whether it's a good time to buy.
Common questions
Is it better to rent or buy a $275k house?
Over 30 years in this projection, buying comes out about $125,229 ahead — buying ends around $1,478,581 vs renting-and-investing around $1,353,351. 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 $275k house?
A 20% down payment is about $55,000, 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."