Rent vs Buy: $400K Home, 20% Down, 6% Rate vs $2,600 Rent
Compare the long-term cost of buying a $400,000 home at 6% with 20% down against paying $2,600/month in rent over 7 years.
How to use this tool
- Enter the home price and your planned down-payment percentage.
- Enter the mortgage rate and term.
- Add your other monthly ownership costs (tax, insurance, HOA, upkeep).
- Enter the monthly rent for a comparable place.
- Set how many years you plan to stay and read which option costs less.
See whether renting at $2,600/month or buying a $400,000 home with a 6% mortgage makes more financial sense over 7 years.
Frequently asked questions
- Is it cheaper to rent or buy?
- It depends mostly on how long you stay. Buying has high upfront costs, so renting is often cheaper over a few years, while buying tends to win over longer horizons once equity and appreciation are counted. This tool compares straight cash outlay; add equity and appreciation for a full picture.
- What costs does buying include here?
- The down payment plus the monthly mortgage principal and interest and your other ownership costs (property tax, insurance, HOA, and maintenance) over your holding period. It does not subtract the equity or appreciation you recover at sale.
- Why might buying actually be better than this shows?
- This is a cash-only comparison. When you sell, you recover your equity and any appreciation, which this baseline ignores. Tax deductions on mortgage interest can also lower the true cost of buying.