What a $100K Down Payment Could Become in the Stock Market

When you make a down payment on a home, that cash stops working for you in the stock market. But it doesn’t just sit there either. Leverage means your $100,000 controls a $500,000 asset. So what actually happens on each path?

All numbers below use our calculator’s default assumptions: $500,000 home, 20% down, 6% mortgage rate, 3% appreciation, $2,500/month rent, 7% investment return.

The homeownership path: leverage is real

Your $100,000 doesn’t grow at 3%. It controls a $500,000 home that appreciates at 3%. In year one, 3% on $500K is $15,000 in appreciation, a 15% return on your $100K equity. You’re also paying down the mortgage, building equity from both directions.

Here’s how your equity actually grows:

Year	Home Value	Mortgage Balance	Your Equity
1	$515,000	$395,000	$120,000
5	$580,000	$372,000	$207,000
10	$672,000	$335,000	$337,000
20	$903,000	$216,000	$687,000
30	$1,214,000	$0	$1,214,000

That $100K becomes $1.21 million in gross equity. Leverage is powerful.

But to access that equity, you have to sell. After 6% selling costs ($73,000), your net equity is $1,141,000. That’s buyer net worth: what the calculator reports.

The renter-investor path: compounding + contributions

The renter invests the $100,000 down payment and also invests the money saved each year by renting instead of owning. At default assumptions, owning costs about $46,600/year in year one while renting costs about $30,200. That $16,400 difference gets invested too, and it grows over time as ownership costs rise faster than rent.

Year	Annual Cost to Own	Annual Cost to Rent	Difference Invested	Portfolio Value
1	$46,600	$30,200	$16,400	$120,000
5	$48,800	$34,000	$14,800	$226,000
10	$52,000	$39,400	$12,600	$395,000
20	$60,000	$52,900	$7,100	$916,000
30	$70,700	$71,100	-$400	$1,851,000

The renter’s portfolio reaches $1,851,000. That’s renter net worth: fully liquid, no selling costs.

Notice something interesting: by year 30, annual owning costs ($70,700) and annual renting costs ($71,100) are nearly identical. The renter’s advantage is built almost entirely in the early and middle years when the cost gap is widest.

The real comparison

	Buyer	Renter-Investor
Net worth at year 30	$1,141,000	$1,851,000
Liquid assets	$0 (all in the house)	$1,851,000

The renter-investor ends up ahead by roughly $710,000. This matches our calculator’s default output.

Why the gap is so large

It’s not just about 7% vs. 3%. Three forces compound against the buyer:

Ownership costs are substantial. Over 30 years, the buyer pays ~$464,000 in mortgage interest, plus $350,000+ in property taxes, insurance, and maintenance. Those dollars build zero equity.
The renter invests the difference early. The cost gap is widest in the early years ($16,400/year) when the renter’s investments have the most time to compound. By year 30, costs converge, but the portfolio is already large.
Compounding is exponential. Early contributions matter most. The renter’s portfolio growth accelerates over time as returns compound on a larger base.

When leverage tips the scales toward buying

Leverage favors the buyer when:

Appreciation is high. At 5% appreciation instead of 3%, the home reaches $2.16M and buyer net worth jumps significantly.
Mortgage rates are low. At 4% instead of 6%, less money goes to interest and more to equity.
Rent is high relative to ownership costs. If rent were $3,500/month instead of $2,500, the renter has much less to invest.

In high-appreciation, low-rate markets, buying can win. But at current rates and national averages, the math favors renting and investing.

The discipline question

Everything above assumes the renter actually invests the difference. Every month. For 30 years. No dipping into the account for vacations, cars, or emergencies.

A mortgage enforces savings whether you’re disciplined or not. That’s its hidden superpower. If you wouldn’t invest the difference, forced equity through homeownership might be your best wealth-building tool by default.

But if you will invest consistently, the math is clear. Run the calculator with your own numbers to see where you land.