"Renting is throwing money away" is one of the most repeated—and most wrong—pieces of financial advice.
"I rushed to buy because everyone said renting was wasting money. I sold 3 years later due to a job change and lost $30,000 between , repairs, and market timing."
The Hidden Costs of Buying
Owning a home costs more than the :
| Cost | Estimate |
|---|---|
| Mortgage payment | $1,800 |
| Property taxes | $300-500 |
| Home insurance | $150-200 |
| Maintenance (1-2% of home value) | $300-500 |
| HOA (if applicable) | $100-400 |
| True monthly cost | $2,650-3,400 |
Watch Out
The true cost of owning is often 50-100% more than the mortgage payment.
When Buying Makes Sense
Do This
Consider buying if:
- You'll stay 5+ years (to offset transaction costs)
- You have a 10-20% saved
- Your -to-income ratio is healthy
- You have an PLUS home repair fund
- You actually want the responsibilities of ownership
When Renting Makes Sense
Do This
Renting is smarter when:
- You might move within 5 years
- You value flexibility and mobility
- The local market is overpriced (rent is much cheaper than buying)
- You're building your or paying off
- You'd rather invest the down payment in the market
The Math Reality
Buying costs that don't build equity:
- Mortgage (most of early payments)
- Property taxes
- Insurance
- Maintenance and repairs
- Closing costs (3-6% when buying, 8-10% when selling)
Renting money that's "thrown away":
- Rent
When you factor in all costs, the "wasted" rent is often comparable to the homeowner's non-equity costs.
The Bottom Line
Pro Tip
Run the numbers for YOUR situation. Use the New York Times rent vs. buy calculator. Often, renting and investing the difference beats buying.
Homeownership can be great—but it's a lifestyle choice, not automatically a financial win.