Is buying a house always better than renting?

No. It depends on how long you stay, local rent-to-price ratios, mortgage rates, maintenance costs, and what you'd do with the down payment if you invested it instead. In expensive markets with low rent-to-price ratios, renting and investing the difference often wins for the first 5-7 years.

What is the breakeven point for buying vs renting?

Typically 5-7 years, but it varies wildly by market. In affordable markets with high rents, buying can break even in 3-4 years. In expensive markets like San Francisco or New York, it can take 10-15+ years. The calculator above helps you find your specific breakeven point.

Is renting really throwing money away?

No. Renting pays for a roof over your head — that's not 'throwing money away.' By that logic, your mortgage interest, property taxes, insurance, and maintenance are also 'thrown away' since they don't build equity. The real question is whether the equity you build by buying exceeds what you'd earn by investing your down payment and the cost difference.

How much does homeownership really cost per year?

Beyond your mortgage payment, budget for property taxes (1-2% of home value), maintenance (1-2%), insurance (0.5-1%), and potentially HOA fees. On a $400,000 home, that's roughly $10,000-$20,000 per year in costs that don't build any equity. Many first-time buyers underestimate these significantly.

Should I buy a house if I can't put 20% down?

You can, but PMI (private mortgage insurance) adds 0.5-1% annually until you reach 20% equity, which can take years. Run the numbers with PMI included. FHA loans require only 3.5% down but come with mortgage insurance for the life of the loan. Sometimes waiting to save more is the better financial move.

Myth Busting

Is Buying a House Worth It?

"Renting is throwing money away" is one of the most expensive lies in personal finance. Let me show you the math your real estate agent won't.

Your Scenario

Home Price

Down Payment

20% avoids PMI

Mortgage Rate

Loan Term

years

Monthly Rent

Annual Rent Increase

Home Appreciation

Historical avg ~3-4%

Investment Return

S&P 500 avg ~7% real

Property Tax Rate

Maintenance %

Years to Compare

years

After 10 Years, Renting + Investing Wins

$44K

Renter wealth: $278K vs Buyer wealth: $234K

Buying never breaks even in this 10-year window

Monthly Cost Comparison

Year 1 costs (before rent increases)

Total Monthly Buy Cost$2,956/mo

Monthly Rent$2,000/mo

Buy cost includes mortgage P&I ($2,023), property tax, maintenance, and insurance. Does not include HOA fees.

The Hidden Costs Nobody Tells You About

Property Taxes

1-2%/yr

Annual cost that never goes away, even after you pay off the mortgage

Maintenance

1-2%/yr

New roof, HVAC, plumbing — the stuff nobody shows on HGTV

Insurance

0.5-1%/yr

Homeowner's insurance, and flood if you're in a zone

Closing Costs

2-5%/yr

Paid upfront when you buy AND when you sell

HOA Fees

$200-500/mo/yr

Condos and planned communities — this adds up fast

Opportunity Cost

Huge/yr

Your 20% down payment could be in the S&P 500 instead

🏠

Glen's Take

I've rented my entire adult life. Not because I can't afford to buy — because the math didn't make sense in the markets where I lived (Miami Beach, DC). My down payment money has been in the market earning returns instead.

Here's the thing: buying a house is a leveraged bet on a single asset in a single zip code. It can work brilliantly or terribly. Ask anyone who bought in 2006. The S&P 500, meanwhile, is 500 of the best companies on earth, globally diversified, and you can sell it in 3 seconds.

That said, a house gives you something stocks don't: forced savings and stability. If you'd blow the down payment on a boat otherwise, buying a house is the better move. Know yourself.

My rule of thumb: if you'll stay 7+ years, buying can make sense. Under 5 years? Rent. The transaction costs alone (closing costs + realtor fees) will eat you alive.

— Glen Bradford, professional renter and index fund enthusiast

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