4 Things That Rent Vs. Buy Home Comparisons Fail to Tell You

You need to compare real costs to get the true picture

Photo by Curtis Adams

Disclaimer: This article is not financial advice. It’s meant for educational and entertainment purposes only.

I see many articles both on this platform and elsewhere on the internet that compare the cost of buying a home with the cost of renting a home. Almost every article I read is missing one or more of the 4 points below.

If you want to compare the costs properly, you need to take all costs into account and not cherry-pick the figures that back up your case.

When you compare total costs, the cost of rent is staggering. Many other articles either don’t want you to see the true costs or aren’t aware of them. The comparisons are usually based on the short term, not the long term.

Disclosure: I have owned and rented many homes over my lifetime. I currently rent, as I’m only planning to stay in this condo for a few months. I will be buying once I’m more settled.

Here are the 4 points that are usually not covered properly

#1 Comparing rent vs. mortgage only for the first year

You need to compare total costs over your lifetime

This should be obvious, but it doesn’t seem to be. I see many articles where the cost of renting a property compared to the cost of buying one only takes into account the initial rent and mortgage costs.

A typical article may say that a condo costs $1,500 to rent but that the mortgage payment would be $1,800 a month. The conclusion is that you’ll be $300 better off renting. This is so wrong.

Yes, you’ll be $300 better off in year one. But what about years 10, 20, 30, and 40?

According to RentCafe, average rent prices increased 36% in the 10 years between 2010 and 2020.

So, let’s assume your $1,500 a month rent in the above example rises by 36% a decade. Your rent will be $2,040 in year 10, $2,774 in year 20, $3,773 in year 30, $5,131 in year 40.

When you compare these rental prices to your fixed $1,800 mortgage payments, they don’t look so good, do they?

After year 30, your mortgage will be paid off. Yet if you’re still renting, you’ll be paying almost $4,000 a month in rent. And that will continue to increase until the day you die.

#2 Assuming you don’t have a deposit for a property

The average mortgage holder in the US has $185,000 of equity

Here’s another mistake these articles make. They assume you’re planning to buy some high-cost property of maybe $400,000. They then say how it’s impossible to get a mortgage because you need to save $40,000 (10%) for a deposit.

What they a missing is that the majority of home buyers already own a home. They will sell that home to buy a new one. As the average American mortgage holder has $185,000 equity in their homes, they can easily afford the deposit.

It’s indeed tough on first-time buyers because they need to save for a deposit. But first-time buyers shouldn’t be buying homes that cost $400,000. They should be starting lower down the property ladder.

According to the National Association of Realtors, “First-time buyers made up 33 percent of all home buyers, the same as last year (2020)”.

#3 Assuming home buyers are single

70% of home buyers are married or unmarried couples

From the NAR article linked above:

Sixty-one percent of recent buyers were married couples, 17 percent were single females, nine percent were single males, and nine percent were unmarried couples.

Here’s another trick the articles use to make buying a home seem impossible. A typical example may go like this: you want to buy a $400,000 home, so need a deposit of $40,000 and a mortgage of $360,000. You’ll need to be earning $120,000 a year to qualify for a mortgage based on 3 times your salary.

This is true for single buyers, but the vast majority of buyers aren’t single. If we re-do the figures based on a couple buying, they become more reasonable. The example above may go like this: you want to buy a $400,000 home, so need a deposit of $40,000 and a mortgage of $360,000. As you’re a couple you’ll only need a $20,000 deposit each and need to be earning $60,000 each a year to qualify for a mortgage based on 3 times your salary.

It doesn’t sound too bad now, does it?

You should also note that single people probably don’t need a $400,000 house. As with first-time buyers, they should be buying lower down the property ladder.

#4 Assuming no one can afford the deposit

There were almost 7 million home sales in 2021

According to Statista:

In 2021, there were 6.9 million home sales in the U.S. and this figure was projected to increase to seven million by 2023. The number of home sales has steadily risen since 2011, except for two slight dips in 2014 and in 2018.

Another fallacy that these articles promote is that no one can afford a deposit payment for a home. Yet in 2021, 6.9 million people bought a home. They either paid cash or were able to afford a deposit and get a mortgage.

I’m not saying everyone can afford a deposit. Many can’t, but these articles are wrong to assume that it’s difficult for everyone. It’s not.


If you want to compare costs you need to make realistic assumptions. Yes, it’s obviously more difficult for a single person to buy their first property in a high cost of living area. But these are a minority of buyers. They are not the typical buyer that many articles make them out to be.

If you’re deciding on whether to buy or rent, make sure you consider the costs for your whole lifetime. If you buy a property with a 3-year mortgage, you’ll be living rent-free for your whole life after the 30 years are up.

If you’re going to rent, you’ll be paying every month until you die. That means paying rent after you’ve retired when you might not have enough income to cover the rent.

Choose wisely.