Renting vs. buying: the real math
Not the "renting is throwing money away" meme, and not the "buying is always better" meme either. Here's a worked example with real numbers — the answer is closer than either side wants to admit.
A worked example
illustrative, not a forecast| Assumption | Value |
|---|---|
| Home price | $350,000 |
| Down payment (20%) | $70,000 |
| Mortgage rate, 30-year fixed | 6.5% |
| Monthly principal & interest | $1,770 |
| Taxes + insurance + maintenance | $758/mo |
| Comparable rent | $2,000/mo |
Owning this home costs about $528/month more than renting the equivalent, once taxes, insurance, and a 1%-of-value maintenance estimate are included — not just the mortgage payment.
Where the money goes, after 7 years
the actual comparisonBuy scenario
Home appreciates at an assumed 3%/year to $430,456. After paying down $26,835 of principal, remaining loan balance is $253,165. Total homeowner equity: $177,290.
Rent scenario
The $70,000 down payment plus the $528/month saved by renting are invested instead, growing at an assumed 7%/year. Total portfolio after 7 years: $171,136.
What actually tips the scale
it's rarely close to obvious| Favors buying | Favors renting |
|---|---|
| You'll stay 7+ years (closing costs amortize) | You might relocate within a few years |
| Local rents are rising faster than home prices | You'd actually invest the difference, not spend it |
| You want a fixed, predictable housing cost long-term | You want flexibility and lower maintenance responsibility |
The honest caveat
read this part tooThis example used specific assumptions — a $350,000 home, 6.5% mortgage rate, 3% home appreciation, 7% investment return. Change any one of these (your local market, your actual mortgage rate, your down payment) and the answer can flip. Run your own numbers rather than trusting a generic rule of thumb.
This page is educational, not personalized financial advice. See our full before investing disclosures before acting on anything here.
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