Key takeaways
- Soaring home prices and elevated interest rates have shifted the rent vs. buy calculus.
- You can still build wealth while renting—if you put the savings to work.
- To come up with an actionable plan, crunch a few numbers, then automate your savings to keep lifestyle creep from siphoning off your cash flow.
To rent or to buy.
It’s a question that eats away at renters, one monthly check at a time. And while it’s often framed in terms of the financials, it’s also a deeply personal decision about how you want to live right now.
The lifestyle side of it—how long you plan to stay in a city, whether a backyard matters more than a short commute—that part is yours to figure out. But the financial side? That’s exactly where we can help.
Is renting or buying your primary residence the smarter money move?
Here’s something the rent-vs-buy debate often gets wrong: it treats homeownership as the default path to wealth and renting as being stuck in a holding pattern at best. But with home affordability in a decades-long rut, and prices skyrocketing since the pandemic, that narrative is being questioned like never before.
The truth is both renting and owning a home can generate meaningful wealth over the long run. The outcome depends less on which option you choose and more on what you do with your money along the way.
For homeowners, that means living in your home long enough to build equity and recoup the substantial upfront and ongoing costs of buying and maintaining a property. That breakeven point now borders on a decade for people buying in today’s market.
For renters, it means investing the money you’re not sinking into your home rather than letting it quietly disappear into lifestyle spending.
How to put the “renting + investing” strategy into practice
As shown in the chart above, the median U.S. home currently sells for a shade over $400k. But here’s what it actually costs to buy and own it—both upfront and on an ongoing basis.
|
Up-front expenses |
Amount |
|
Down payment (20%) |
$80,640 |
|
Closing costs (6%) |
$19,354 |
|
Total |
$99,994 |
|
Ongoing expenses |
|
|
Mortgage (6.53% rate) |
$2,047 |
|
Property tax |
$504 |
|
Homeowners insurance |
$215 |
|
Maintenance |
$504 |
|
Total |
$3,270/mo |
All assumptions per NerdWallet’s Rent vs Buy calculator unless otherwise linked
The numbers are worth sitting with for a moment. Not because they should discourage you, but because your gut reaction to them is useful information. If saving more than $100,000 in liquid cash feels out of reach right now, the timing may not be right.
And if now isn’t the time to buy, that’s completely okay. The rent-vs-buy calculus shifts at different stages of life, and many people land on different answers at 28 than they do at 38.
What matters most if you’re renting is treating the gap between what you’re spending now and what homeownership would cost as an investable sum.
Crunch the upfront and ongoing numbers above based on your own situation, then follow two steps to see the strategy through to the end:
- Start saving for those upfront costs now, preferably in a high-yield cash account or conservative investing allocation.
- Once that goal is reached, consider setting up a recurring deposit that invests the difference in costs between renting and owning.
Now it’s no longer a hypothetical. You’re putting those savings to work. Should you decide to buy down the road, you’ll be more financially ready—and the tradeoff will be clear:
Buy a house. Or keep saving at your current levels. Either one can help you build wealth if you stay the course.
