Rent vs buy a $550k house
Over 30 years, buying a $550k home comes out about $306,275 ahead — comparing buying (20% down, $110,000) against renting at $2,750/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 $110,000 down payment. The renter invests it (and any monthly difference) at 7%; the buyer puts it into a $550k home appreciating 3%/yr with a 30-year mortgage. In today's dollars:
| Age | Rent & invest | Buy |
|---|---|---|
| 30 | $140,626 | $137,560 |
| 35 | $335,628 | $365,102 |
| 40 | $571,444 | $638,279 |
| 45 | $855,864 | $966,083 |
| 50 | $1,199,058 | $1,360,098 |
| 55 | $1,613,485 | $1,834,452 |
| 60 | $2,114,201 | $2,420,476 |
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 $550k home is compared to $2,750/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.
Renting only wins if you invest the difference
The case for renting rests on an assumption that is easy to state and hard to keep: that the money not spent on ownership is actually invested. That means both the down payment that never leaves your accounts and the monthly difference whenever renting costs less than owning — the taxes, maintenance, and insurance you avoid.
Invested steadily in a diversified portfolio, those amounts are what let renting rival or beat buying over time. Spent instead on a larger lifestyle, the comparison quietly collapses: the renter keeps the flexibility but never builds the offsetting balance, while the owner has been accumulating equity whether they meant to or not.
That is the underrated strength of a mortgage — it is a form of forced saving. Each payment chips away at the loan on a schedule that does not depend on willpower. Renting can win on paper and still lose in practice, and the deciding factor is behavioral: whether the difference is invested with the same discipline a mortgage would have imposed.
Common questions
Is it better to rent or buy a $550k house?
Over 30 years in this projection, buying comes out about $306,275 ahead — buying ends around $2,420,476 vs renting-and-investing around $2,114,201. 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 $550k house?
A 20% down payment is about $110,000, 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."