After 7 years, renting leaves you $5,230 better off. Buying pulls ahead in year 8.
Monthly at the start: rent $2,200, owning $2,960 (mortgage $2,275 plus ownership costs). With these assumptions, renting and buying break even at a rent of about $2,246 a month.
| Year | Monthly rent | Monthly owning | Buyer's net worth | Renter's net worth |
|---|---|---|---|---|
| 1 | $2,200 | $2,960 | $31,304 | $64,379 |
| 2 | $2,266 | $2,981 | $47,216 | $76,937 |
| 3 | $2,334 | $3,002 | $63,763 | $89,668 |
| 4 | $2,404 | $3,024 | $80,977 | $102,564 |
| 5 | $2,476 | $3,046 | $98,888 | $115,619 |
| 6 | $2,550 | $3,070 | $117,528 | $128,822 |
| 7 | $2,627 | $3,093 | $136,934 | $142,164 |
Where these numbers come from: Rent vs buy: how to compare them fairly
Sharing a place? Split the rent between flatmates.
Mostly it depends on how long you stay. Buying has high costs to get in and out (closing costs, agent commission) that need years to spread out. For a short stay, renting usually wins.
3.5% with a credit score of 580 or higher, 10% with a score of 500 to 579. FHA loans also carry mortgage insurance: an upfront premium plus an annual one, which belongs in the ownership costs here.
Because otherwise the comparison is unfair. The buyer turns cash into a home; the renter keeps the same cash and can grow it.
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