Every few months, someone in my life tells me I’m “throwing money away” by renting. Usually it’s an older relative who bought their house for $40,000 in 1985. I smile, nod, and then quietly think about the actual math.
Because I’ve run the numbers. Multiple times. And for my situation, renting is currently the smarter choice. Not because buying is bad, but because the “rent is throwing money away” thing is genuinely not true.
Let me show you how I think about it.
The Hidden Costs of Owning
When people compare rent to a mortgage payment, they’re not making an apples-to-apples comparison. A mortgage payment isn’t the full cost of homeownership. Not even close.
Here’s what else you’re paying:
Property taxes: In my area, about 1.2% of home value annually. On a $350,000 house, that’s $4,200/year, or $350/month.
Home insurance: Call it $150/month. More if you’re in a flood or fire zone.
Maintenance: The general rule is 1% of home value per year. So another $3,500/year, or about $290/month. And that’s an average — some years it’s nothing, some years your AC dies and your roof leaks and you’re spending $15,000.
Interest on the mortgage: In the early years of a 30-year mortgage, most of your payment is interest, not principal. It’s not “building equity” — it’s paying the bank. On a $280,000 mortgage at 7%, you’re paying about $1,600/month in interest at the start.
The CFPB’s homebuying resources walk through all these costs if you want the official breakdown. It’s genuinely useful if you’re actually house shopping.
The Math for My Situation
Let me get specific. I pay $1,800/month to rent a 2-bedroom apartment in a nice area. Here’s what it would cost to own a comparable place:
Median home price in my area: ~$350,000
Down payment (20%): $70,000
Mortgage (30yr at 7%): $1,862/month
Property taxes: $350/month
Insurance: $150/month
Maintenance: $290/month
Total monthly cost: ~$2,652
That’s $850/month more than I’m paying now. Plus I’d have to come up with $70,000 for a down payment (plus closing costs, which would be another $10,000-15,000).
Yes, I’m building no equity by renting. But that $850/month difference? If I invest it instead, it grows too. The down payment I’m not using? Also invested and growing.
Over time, homeownership often wins because of appreciation. But it’s not guaranteed, and it depends heavily on how long you stay and what the local market does.
The Non-Financial Factors
Money isn’t everything. There are legit reasons to buy beyond the math:
Stability: No landlord can decide not to renew your lease. You control your housing situation.
Customization: Want to paint the walls purple and renovate the kitchen? Your call.
Forced savings: Some people (honestly, me included) aren’t disciplined enough to invest the rent-vs-own difference. Paying a mortgage forces you to build equity.
Emotional value: Owning a home means something to people. That feeling of “this is mine” has value, even if it’s hard to quantify.
The CFPB’s home loan toolkit has worksheets to help you think through the affordability question specifically for your situation.
When Buying Makes More Sense
I’m not anti-homeownership. There are situations where buying is clearly better:
You’ll stay put for 5+ years. The transaction costs of buying and selling are huge. You need time to offset them.
Your local rent-to-price ratio is favorable. In some markets, mortgages are genuinely cheaper than comparable rent. In others (like mine), they’re not.
You want roots. If you’re planning to raise kids, be near family, stay in one community long-term — those are real considerations.
You have a solid down payment saved. Buying with less than 20% down adds PMI costs and makes the math worse.
Why I’m Still Renting (For Now)
My reasons come down to:
I’m not sure I’ll stay in this city long-term
The buy-vs-rent math doesn’t favor buying here
I like the flexibility of being able to move easily
I’m not ready to handle home maintenance responsibilities
That could all change. If I decide I’m staying here permanently, if prices drop or rates come down significantly, if I just get tired of renting — I’ll reconsider.
But “you’re throwing money away” isn’t a good enough argument. Money spent on housing isn’t thrown away just because you don’t own the house. Shelter has value. The question is whether the premium you pay for ownership makes sense in your specific situation.
Run your own numbers. Think about your life circumstances. Don’t let outdated conventional wisdom push you into a $300,000+ decision you’re not ready for.