Learn › Will it actually make money
Is renting or buying cheaper, for how long you'll actually stay?
The mortgage-payment-vs-rent-check comparison almost everyone runs in their head is missing three real costs and one opportunity cost.
The comparison most people run when deciding whether to buy is simple, quick, and wrong: is the mortgage payment more or less than what I'd pay in rent? A mortgage payment is not the cost of owning a home — it's one line item inside it, and treating it as the whole picture is how people end up surprised by how much homeownership actually costs, or how much renting actually saved them.
What the naive comparison leaves out
- The opportunity cost of the down payment. That money doesn't vanish if you rent instead — it could be invested, and what it would have earned is a real cost of choosing to tie it up in a house.
- Closing costs, going in, that a renter never pays at all.
- Ongoing maintenance — typically budgeted around 1% of home value per year — that a landlord absorbs for a renter but a homeowner absorbs personally.
- Selling costs, eventually, if the homeowner ever moves — commission and fees alone typically run 8-9% of the sale price, as covered in the next lesson.
On the reference deal — a $315,000 home against a comparable $2,150/month rental — the mortgage payment alone might look competitive with rent. Once you add property tax, insurance, maintenance, and the opportunity cost of the roughly $20,000-plus a real down payment would tie up, the honest monthly cost of owning is meaningfully higher than the mortgage payment suggests, at least in the early years.
Why the answer depends on time horizon, not just price
This is the part most rent-vs-buy discussions skip entirely: buying is not universally better in the long run and renting is not universally better in the short run — the honest comparison finds a specific breakeven year for your specific numbers, and staying past it favors buying while leaving before it usually favors renting. A short expected stay (under roughly three to four years) rarely clears the up-front closing costs no matter how attractive the monthly payment looks; a long stay usually lets appreciation and equity-building overcome those same costs.
Worth knowing — Discount in real, inflation-adjusted dollars — not nominal
Comparing raw nominal dollars 20 years apart overstates whichever side has more of its cost in the distant future, because it ignores that a dollar then buys less than a dollar now. A rigorous comparison discounts every future cash flow — including the eventual sale proceeds for buying and the returned deposit for renting — back to today's dollars using the real (inflation-adjusted) rate, not a simple subtraction of nominal totals. That's what separates a genuine breakeven analysis from a rough guess, and it's the calculation the tool below actually runs.
None of this makes buying or renting the objectively right answer — it makes the right answer specific to your numbers, your market's rent-to-price ratio, and, most of all, how long you actually expect to stay. Run your own numbers below rather than trusting either side's conventional wisdom.