Is It Cheaper to Rent or Buy a Home? Comparing the Costs

The annual costs of a mortgage and rent are nearly the same. In 2024, renters paid an average of $15,893 in rent while homeowners with a mortgage paid $16,980 in combined mortgage interest and principal, just $1,087 more than renters, according to the Bureau of Labor Statistics Consumer Expenditure Survey.

Looking at total housing costs changes the equation. Property taxes, insurance, maintenance, and utilities add more than $10,000 per year for owners with a mortgage -- costs renters largely avoid. Putting those costs together, owners with a mortgage spent $27,039 on housing and utilities in 2024, compared to $19,572 for renters. When looking at total housing costs, homeowners with a mortgage spent almost $7,500 more than renters in 2024.

Yet renters devoted a larger share of their income to housing than any homeowner group. Renters spent 29.9% of pretax income on housing and utilities in 2024, compared to 17.9% for owners with a mortgage. That difference is driven by homeowners' earnings and income, which are more than twice those of renters, on average, according to BLS.

Renting vs. owning: What the numbers show

Renters, owners with a mortgage, and owners without a mortgage spend vastly different amounts on housing. Here's how costs for each group break down:

• Owners with a mortgage spent an average of $21,056 on housing, 14% of pretax income. The average combined mortgage payment was $16,980 annually ($9,725 in interest plus $7,255 in principal). Property taxes ($4,689), homeowners insurance ($1,142), and maintenance ($4,704) added $10,535 on top of mortgage payments. Adding utilities ($5,983), homeowners with a mortgage spent $27,039 on housing, or 17.9% of their income.
• Owners without a mortgage spent an average of $9,807 on housing, 10.8% of pretax income. Without a mortgage, their housing costs consist primarily of property taxes ($3,574), insurance ($1,096), and maintenance ($4,187). In both absolute dollars and income share, this group carries the lightest housing burden. Adding utilities ($5,208), homeowners without a mortgage spent $15,015 on housing, or 16.5% of their income.
• Renters spent an average of $16,523 on housing, 25.2% of pretax income. Rent makes up the majority of that cost ($15,893). Taxes, insurance, maintenance, and other spending, including lodging on trips, make up the remainder of housing costs for renters. Adding utilities ($3,049), renters spent $19,572 on housing, or 29.9% of their income.
  

Is it more affordable to rent or buy a home? What the full cost picture shows

When looking at total housing costs, including mortgage and rent payments, insurance, taxes, maintenance, and utilities, renting is cheaper than owning a home with a mortgage, on average. As a share of income, however, renters spend more on housing than homeowners.

Even though owning a home is more expensive than renting in absolute terms, home ownership can carry a financial benefit not captured by the spending numbers. Each mortgage payment builds home equity that can appreciate over time. For owners who stay in a home long enough, that can offset, and potentially exceed, higher costs.

These figures are national averages. Local housing markets, down payment requirements, mortgage rates, the potential to refinance a mortgage, and how long someone plans to stay in a home will determine which option is more affordable for any given household.