Starter-Home: Renting at $1,900/mo vs Buying a $350,000 Home Over 9 Years at 7.25% Rate
This worked example compares renting at $1,900 per month with buying a $350,000 home over 9 years, using a $35,000 down payment, a 7.25% mortgage rate, 1.1% property tax, $1,800 annual insurance, $0 monthly HOA, 1% annual maintenance, 3% 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 9 years, by about $5,377.
Better option under these assumptions
Buy
Total cost of renting
$205,200
Total cost of buying (net of equity)
$199,823
Estimated home equity
$178,950
Rent vs buy difference
$5,377
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 $1,900 per month for 9 years, or $205,200.
Buying costs combine the $35,000 down payment, mortgage payments, property taxes, insurance, HOA, and maintenance over the same period.
The $35,000 down payment could have grown at 7% if invested instead, so that foregone growth is added as an opportunity cost.
Estimated home equity of $178,950, based on 3% annual appreciation, is subtracted to reach a net cost of buying of $199,823.
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
$22,800
$23,838
-$1,038
Year 2
$45,600
$47,303
-$1,703
Year 3
$68,400
$70,382
-$1,982
Year 4
$91,200
$93,059
-$1,859
Year 5
$114,000
$115,318
-$1,318
Year 6
$136,800
$137,142
-$342
Year 7
$159,600
$158,513
$1,087
Year 8
$182,400
$179,414
$2,986
Year 9
$205,200
$199,823
$5,377
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 starter home scenario emphasize?
A starter-home price range like this one uses a smaller down payment and more typical ownership cost assumptions.