The rent-versus-buy question dominates personal finance, yet most people get it wrong by focusing on monthly payments instead of time horizon. The decision that actually matters is how long you'll stay and what you do with the money you don't spend on a down payment.
Closing costs (2-5% to buy, 6-10% to sell) mean you typically need 5 years to recoup them. Stay fewer than 5 years and renting almost always wins financially, even with rising rents.
Keep total housing costs—mortgage, taxes, insurance, maintenance—under 30% of gross monthly income. Above 40%, you're house-poor and one repair away from crisis. Lenders may approve you for more; don't take it.
A 20% down payment on a $400,000 home is $80,000. Invested at a 7% real return, that's $5,600 per year in forgone gains. If renting costs less than owning by more than that, renting wins even long-term.
Comparing only the monthly mortgage payment to rent. Mortgage payments exclude taxes, insurance, maintenance (1-2% of home value annually), and the opportunity cost of the down payment—often adding 40-50% to the true cost.
This question changes shape with age. Read the cell that matches you:
With mortgage rates above 6%, renting is cheaper than buying in most major metros. Buy only if you plan to stay 5+ years and can put down 20%.
Keep total housing costs under 30% of gross income. On a $100,000 salary, that's $2,500 per month including taxes, insurance, and maintenance.
You'll pay PMI (0.3-1.5% of loan annually) and have less equity. Wait until you have 10-20% down unless you're in a rapidly appreciating market and staying 7+ years.
A focused answer for your age band and constraints, not general advice.
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