I was in your exact same situation two years ago. I went with the Home Depot option. The water heater performs fine, but I do have regrets.
Installation
My first regret was trusting Home Depot. You are 100% right to suspect the $400 installation cost. Every house is different, but in mine it took the guy a little over 30min to install. So on an hourly rate basis, that's pretty pricey. If you have a drain nearby, you can move the old tank out when it's empy, which is easy to do if you have a dolly. The new one is of course empty, so it's not too hard to move. There are a couple "nice to know" things such as putting in wedges to ensure the new heater doesn't move on a sloped floor... So it might be good to get someone with experience if you've not installed one before. But check out a handyman. Get one with references, and also check him out on BBB.org. Bet you can cut the installation price significantly over what Home Depot charges.
Water Heater
Second point is on the water heater it's self. I got the Home Depot top of the line, and didn't research it much myself. Big mistake. The energy utilization sticker indicated it was a mid-grade efficiency model. I had thought for top price, I'd get a top model. Bad assumption.
I also priced a tankless hot water heater. Thing about those is that there are few brands, they take regular maintenance, and they are expensive to repair since not as many plumbers are trained to work on them.
I also priced a solar water heater. Ridiculously expensive.
The traditional tank system is relatively cheap, and the technology is very well known and reliable.
So in summary, research the water heater yourself, get one you are happy with. Then get an experienced neighbor or handyman to price the install for you. Compare that to what Home Depot is telling you before you decide.