Rent vs buy a $850k house
Over 30 years, buying a $850k home comes out about $522,808 ahead — comparing buying (20% down, $170,000) against renting at $4,250/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 $170,000 down payment. The renter invests it (and any monthly difference) at 7%; the buyer puts it into a $850k home appreciating 3%/yr with a 30-year mortgage. In today's dollars:
| Age | Rent & invest | Buy |
|---|---|---|
| 30 | $212,537 | $208,650 |
| 35 | $485,313 | $536,491 |
| 40 | $812,570 | $927,266 |
| 45 | $1,205,869 | $1,394,606 |
| 50 | $1,679,179 | $1,954,917 |
| 55 | $2,249,374 | $2,627,960 |
| 60 | $2,936,854 | $3,459,662 |
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 $850k home is compared to $4,250/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 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.
Why pricey markets often favor renting on paper
In many high-cost areas, home prices have climbed faster than rents for years, which pushes the price-to-rent ratio high. That ratio is the quiet heart of this decision: when it is high, the yearly cost of owning a home runs well above the rent on an equivalent one, and renting while investing the difference tends to win unless prices keep rising quickly.
A high ratio is common exactly where homes are expensive, because rents are tethered to local incomes while prices can be bid up by scarcity, thin inventory, and buyers betting on appreciation. That is a weaker foundation than rent growth, and it leaves an owner depending on continued price gains to come out ahead.
The counterweight is time and inflation. The longer you stay, the more a fixed mortgage payment stays frozen while rents drift upward, and the more buying's upfront transaction costs get spread out. In a high price-to-rent market the break-even simply arrives later, so buying makes the most sense when you are confident you will stay put for many years.
Common questions
Is it better to rent or buy a $850k house?
Over 30 years in this projection, buying comes out about $522,808 ahead — buying ends around $3,459,662 vs renting-and-investing around $2,936,854. 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 $850k house?
A 20% down payment is about $170,000, 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."