Should you rent or buy a home on a $100k salary? Compare monthly costs, 5-year net worth impact, tax benefits, and opportunity costs. Free rent vs buy calculator included.
📊 The Short Answer
On a $100,000 income, you can afford a home up to ~$350,000 comfortably. Renting is cheaper month-to-month ($1,800 rent vs $2,400 mortgage), but buying builds equity. Over 5 years, buying creates ~$60,000 in equity vs $0 from renting. However, buying only wins if you stay 5+ years — transaction costs eat gains if you move sooner. In high-cost cities where homes cost $600,000+, renting often wins financially.
Maximum Affordable Home Price (28% rule)
With 20% down ($70,000), monthly payment = $2,333. 28% of $8,333 monthly income = $2,333.
Monthly Cost: Buying ($350k home)
P&I: $1,772. Tax: $321. Insurance: $133. Maintenance: $107 (0.37%/yr). Includes home appreciation benefit.
Monthly Cost: Renting
National median rent. No maintenance, no property tax, no insurance beyond renter's policy.
5-Year Net Worth: Buying
Equity built: $55,000 + appreciation: $35,000 - transaction costs: $29,800 = $60,200 net gain.
5-Year Net Worth: Renting + Investing Down Payment
Investing $70,000 down payment at 7% for 5 years = $98,200 - $70,000 = $28,200 gain + $14,300 lower monthly costs invested = $42,500 total.
| Buying ($350k Home) | Renting | |
|---|---|---|
| Monthly Payment | $2,333 | $1,800 |
| Down Payment | $70,000 (one-time) | $0 |
| Equity Built (5yr) | $55,000 | $0 |
| Home Appreciation | $35,000 (2%/yr) | $0 |
| Transaction Costs | -$29,800 | $0 |
| Investment Gains | $0 | $42,500 |
| Net Worth Impact | +$60,200 | +$42,500 |
| Winner | ✅ Buying (+$17,700) | — |
We compare two scenarios over 5 years: (1) Buy a $350k home with 20% down and sell after 5 years, net of all costs. (2) Continue renting at $1,800/month and invest the $70,000 down payment plus the monthly savings difference in a 7% return portfolio. Net worth is the primary comparison metric.
Outcome: Monthly payment drops to $1,700. Invest $633/month savings + smaller down payment. Net worth impact: +$80,000 over 5 years.
Pros
Cons
Outcome: Rental income of $1,200/month offsets mortgage. Effective monthly cost drops to $1,133 — cheaper than renting. Builds equity faster.
Pros
Cons
💡 What This Means For You
On a $100,000 income, buying a $350,000 home builds more wealth than renting over 5+ years — but only by about $17,700. The 'buying always wins' narrative is oversimplified. If you value flexibility, hate maintenance, or live in an expensive city, renting and investing the difference can be equally smart. The key is to actually invest the savings — most renters don't. Use the Rent vs Buy calculator below to model your exact numbers.
The 28/36 rule suggests a maximum monthly housing payment of $2,333 (28% of $8,333 monthly gross). At 6.5% interest with 20% down, that's roughly a $350,000 home. With other debts, your maximum drops proportionally.
Not necessarily. Renting buys you flexibility, zero maintenance costs, and predictable expenses. The 'throwing money away' argument ignores that mortgage interest, property taxes, insurance, and maintenance are also non-recoverable costs — about $1,500/month on a $350k home, comparable to rent.
The general rule: buy if you'll stay 5+ years. This allows enough time for appreciation and equity building to overcome ~8-10% in transaction costs (buying + selling). For shorter periods, renting is usually cheaper.
Don't try to time the market. If rates drop, you can refinance. If rates rise, you'll wish you bought sooner. Buy when you're financially ready and find a home you love. A 1% rate drop on a $280k loan saves about $180/month — significant but not worth delaying your life.
Important Disclaimer — Not Financial Advice
The results from this calculator are for informational and educational purposes only. They are not a guarantee of actual outcomes and should not be considered financial, investment, tax, or legal advice. Always consult a qualified professional for advice tailored to your specific financial situation. See our Terms of Service and Privacy Policy for more information.
Last reviewed by Qasem Mohammed — May 31, 2026
AI & Software Engineer, Founder & Lead Developer at QFINHUB · Editorial Policy