Long-Hold: Renting at $3,100/mo vs Buying a $650,000 Home Over 30 Years at 6.5% Rate
This worked example compares renting at $3,100 per month with buying a $650,000 home over 30 years, using a $130,000 down payment, a 6.5% mortgage rate, 1.2% property tax, $2,100 annual insurance, $100 monthly HOA, 1.1% annual maintenance, 3.5% home appreciation, and a 7% alternative investment return on the down payment.
Calculated answer
Buy
Under these assumptions, it is estimated to be cheaper to buy over 30 years, by about $220,091.
Better option under these assumptions
Buy
Total cost of renting
$1,116,000
Total cost of buying (net of equity)
$895,909
Estimated home equity
$1,824,416
Rent vs buy difference
$220,091
How This Rent vs Buy Example Works
Cost of buying = down payment + mortgage payments + taxes + insurance + HOA + maintenance + down-payment opportunity cost − estimated home equity
The page reuses the shared Rent vs Buy Calculator assumptions to compare total renting cost with the net cost of buying, after subtracting the estimated home equity retained at the end of the comparison period.
Total renting cost is $3,100 per month for 30 years, or $1,116,000.
Buying costs combine the $130,000 down payment, mortgage payments, property taxes, insurance, HOA, and maintenance over the same period.
The $130,000 down payment could have grown at 7% if invested instead, so that foregone growth is added as an opportunity cost.
Estimated home equity of $1,824,416, based on 3.5% annual appreciation, is subtracted to reach a net cost of buying of $895,909.
Buy Advantage by Year
The chart shows the estimated advantage of buying over renting in each year. A positive value means buying is ahead; a negative value means renting is ahead.
Year-by-Year Rent vs Buy Projection
Year
Cumulative Rent Cost
Cumulative Buy Cost (Net of Equity)
Buy Advantage (Rent − Buy)
Year 1
$37,200
$38,229
-$1,029
Year 2
$74,400
$75,909
-$1,509
Year 3
$111,600
$113,032
-$1,432
Year 4
$148,800
$149,587
-$787
Year 5
$186,000
$185,568
$432
Year 6
$223,200
$220,965
$2,235
Year 7
$260,400
$255,772
$4,628
Year 8
$297,600
$289,981
$7,619
Year 9
$334,800
$323,588
$11,212
Year 10
$372,000
$356,587
$15,413
Year 11
$409,200
$388,974
$20,226
Year 12
$446,400
$420,746
$25,654
Year 13
$483,600
$451,903
$31,697
Year 14
$520,800
$482,444
$38,356
Year 15
$558,000
$512,371
$45,629
Year 16
$595,200
$541,686
$53,514
Year 17
$632,400
$570,396
$62,004
Year 18
$669,600
$598,507
$71,093
Year 19
$706,800
$626,030
$80,770
Year 20
$744,000
$652,977
$91,023
Year 21
$781,200
$679,362
$101,838
Year 22
$818,400
$705,205
$113,195
Year 23
$855,600
$730,527
$125,073
Year 24
$892,800
$755,354
$137,446
Year 25
$930,000
$779,715
$150,285
Year 26
$967,200
$803,644
$163,556
Year 27
$1,004,400
$827,181
$177,219
Year 28
$1,041,600
$850,369
$191,231
Year 29
$1,078,800
$873,260
$205,540
Year 30
$1,116,000
$895,909
$220,091
Why home equity is subtracted from buying costs
Home equity is an asset retained after the comparison period, so treating principal payments and appreciation as a pure expense would overstate the true cost of buying.
This example nets out estimated home equity, which is why the "total cost of buying" figure can end up lower than the sum of every individual ownership cost.
How to use this example
Treat this result as a planning baseline, not a certainty. Home prices, rents, and investment returns can all move in ways this fixed-assumption model does not capture.
Use the full calculator if you need to test a different home price, rent, down payment, rate, or time horizon.
Run Your Own Rent vs Buy Scenario
Use the calculator to change the home price, rent, down payment, rate, and time horizon.
Does this example assume rent stays the same every year?
Yes. This example holds the monthly rent fixed for the full comparison period rather than modeling rent inflation.
Does property tax grow with home appreciation in this example?
No. Property tax is modeled as a fixed percentage of the original purchase price each year, not the appreciated value.
Why does the down payment opportunity cost matter?
Money used for a down payment cannot also be invested elsewhere. This example estimates what that money could have grown to at the entered investment return and counts the foregone growth as a cost of buying.
Does this include selling costs if the home is sold at the end of the period?
No. This example estimates ongoing costs and ending equity, not the transaction costs of a future sale.
What does this long hold scenario emphasize?
A longer comparison horizon like this one gives home equity more time to build through principal payments and appreciation, which often favors buying.