Renting vs. Buying a Home: Comparing the Costs

Renting and buying a home comes with different costs and benefits. Homeowners pay a higher median mortgage payment than renters pay for their monthly rent, and homeowners spend more on other housing costs like insurance, utilities, and furniture.

While the costs are generally higher for homeowners, they do come with benefits, chiefly building equity in a home that hopefully appreciates in value.

A full breakdown of the costs of renting vs. buying a home are below.

Is it cheaper to rent or buy a home?

Over the course of a year, homeowners spend an average of $5,068 more on housing costs than renters do, according to 2023 consumer expenditure data collected by the Bureau of Labor Statistics.

That year, homeowners spent $27,205 while renters spent $22,137. Those costs include rent and mortgage payments in addition to related housing costs like insurance, taxes, utilities, maintenance, and more.

Looking just at the cost of shelter, which is the expense necessary to secure a place to live -- like a mortgage payment or rent -- homeowners with a mortgage paid nearly $3,500 more in 2023 than renters. More recent analysis from CBRE shows that the average new monthly mortgage payment is 38% higher than the average monthly rent payment. Redfin found that in January 2025, it was cheaper to rent than buy a home in every major metro area except for Detroit and Pittsburgh.

Homeowners pay more in every major household expense category than renters do. In some categories, like property taxes and maintenance, renters generally pay nothing while homeowners are entirely on the hook for thousands of dollars each year.

Homeowners also pay thousands more in utilities, and hundreds more for furniture, housekeeping supplies, and appliances.

Buying a home comes with additional upfront costs that renters don't have to pay, such as a down payment and closing costs. The average down payment on a home is 15% of its value, which is nearly $63,000 based on the median home sales price in the fourth quarter of 2024. Average closing costs on a home are usually between 1% to 5% of the home sales price.

Pros and cons of renting vs. buying a home

Buying a home comes with some unique upsides, including building equity in an asset that hopefully appreciates, not having to deal with changing rent, landlord, apartment building restrictions, and more freedom to renovate your living space.

On the other hand, buying a home requires a significant immediate investment in the form of a down payment and closing costs. Homeowners are more responsible for maintenance and repairs than renters, which can be costly and time consuming. Owning a home also comes with less flexibility. Moving could require finding a renter or selling the home, both of which can be tricky to navigate.

Renting has advantages in terms of cost and flexibility. The upfront costs to rent are much smaller -- usually a security deposit and first and last month's rent -- and renters generally don't pay for routine maintenance and upkeep. There's also no property tax to pay and renters insurance tends to be cheaper than homeowners insurance.

Renters, however, pay their landlord and don't have the opportunity to build equity. They also have to live within the restrictions their landlord sets, which can limit opportunities to change their living space. Renters rely on their landlord to carry out maintenance and repairs, which, while generally free of charge, can take longer or be done less thoroughly than if they entirely controlled the process.

How to know if you should rent or buy a home

The decision between renting and owning a home is a difficult one to make and is unique for each person. Key factors to consider are whether you can afford higher monthly housing costs that come with owning and if you want to settle in one place for the long term.

The bottom line is that the choice between renting and buying a home comes down to personal financial circumstances, lifestyle preferences, and long-term goals. Taking a hard look at those factors can guide a decision on whether to rent or buy.