What Home Price Might Match Your Rent Budget?
This assumption is highly conservative. A popular area in Lynnwood has experienced a 9.13% annual appreciation in home prices over the past 10 years. However, the following example assumes a rate of less than one-third of that.
Using a 30-year FHA loan with a 3.5% down payment at ~8.5% interest, here’s an approximate purchase price that yields a monthly cost (principal + interest + taxes + mortgage insurance) close to each rental amount:
| Rent | Approx. Purchase Price | 3.5% Down Payment | Est. Monthly Principal & Interest | +1% Property Tax (/12) | +$200 MI | Total Monthly |
|---|---|---|---|---|---|---|
| $2,000 | $200,000 | $7,000 | ~$1,536 | ~$167 | $200 | ~$1,903 |
| $3,000 | $320,000 | $11,200 | ~$2,458 | ~$267 | $200 | ~$2,925 |
| $4,000 | $445,000 | $15,575 | ~$3,420 | ~$371 | $200 | ~$3,991 |
Renting vs. Buying: A Quick Overview
- Rent = “Lost” Money: Your rent payments don’t build equity or benefit from market appreciation. Once paid, that money is gone.
- Down Payment + Mortgage: When buying, you’ll pay a down payment and monthly mortgage. However, part of each mortgage payment increases your ownership (equity) in the home.
- Value Appreciation: Assuming a conservative 3% annual growth, homeowners can potentially see returns on their investment over time. Higher appreciation rates in areas like Western Washington may further amplify gains.
Comparison of Years vs. Rent, Home Price, and Potential Asset Gains
Below is a simple table showing:
- How many years you rent vs. own
- Total rent paid (assuming $3,000/month)
- Estimated home purchase price you could afford with a similar monthly payment
- Potential asset gains after that time with 3% annual appreciation
- Potential asset gains after that time with 9% annual appreciation
| Years | Rent Paid (at $3,000/mo) | House Price (Approx.) | Asset Gain @ 3% Annual | Asset Gain @ 9% Annual |
|---|---|---|---|---|
| 5 | $180,000 | $320,000 | $51,000 | $172,000 |
| 10 | $360,000 | $320,000 | $110,000 | $438,000 |
| 15 | $540,000 | $320,000 | $179,000 | $846,000 |
Notes:
- Rent Paid is calculated as $3,000 × 12 × number of years.
-
House Price is a ballpark figure for a home that could be afforded
with a ~$3,000 monthly payment (including mortgage, taxes, and possibly
mortgage insurance, depending on exact financing). -
Asset Gain is the increase in home value over the original purchase price,
assuming either a 3% or 9% annual appreciation rate. Actual market appreciation
varies over time.
