We’ve all heard the expression, “renting is just throwing money away.” The latest data show a more nuanced picture. In 2025, just over half of millennials (born 1981–1996) own homes—Apartment List places the cohort in the low-to-mid 50s%—while the Census Bureau’s age brackets that span millennials report roughly 40% for households under 35 and about 62–63% for ages 35–44 (Apartment List 2025; Census HVS; Urban Institute study). Affordability remains tight: 30‑year mortgage rates have generally been in the mid‑6% to low‑7% range in 2025 (Freddie Mac PMMS), home prices are at new highs with recent year‑over‑year gains in the mid‑single digits (FHFA HPI; S&P CoreLogic Case‑Shiller), and the nation faces an estimated 3.8 million‑home supply shortfall (Freddie Mac). Homeownership can build wealth via principal paydown and appreciation—baseline outlooks call for continued, modest price gains through 2025 (Fannie Mae ESR; CoreLogic HPI)—but renting may be the better choice if your time horizon is short or local ownership costs far exceed comparable rent. If you’re moving soon, use the questions below to compare today’s rent‑versus‑buy tradeoffs with current data (Harvard JCHS 2025).
How long will you live in your next home?
Time in the home is the biggest swing factor. With mortgage rates still elevated and prices high, monthly owner payments often exceed comparable rents. An illustrative late‑2025 scenario from our rent‑vs‑buy framework shows that a $400,000 purchase with 10% down at ~6.75% can carry roughly $3,600–$3,700 per month after including P&I, taxes, insurance, PMI, HOA, and a maintenance reserve, versus a comparable rent near $2,200—a ~$1,400 monthly “owner premium” at the outset. Break‑even typically requires a longer hold—often 7–10+ years—unless you avoid PMI, buy in lower tax/insurance markets, or benefit from stronger appreciation (Freddie Mac PMMS; FHFA HPI; Apartment List Rent Data).
If your expected tenure is under about 5–7 years, renting often wins on total cost because you avoid 2%–5% buyer closing costs and 6%–8% selling costs. Leases typically run 6–24 months, offering flexibility. If you plan to stay longer, note that national repeat‑sales indices posted mid‑single‑digit annual gains by late‑2024 and major forecasts expect low‑ to mid‑single‑digit appreciation through 2025—though outcomes vary widely by metro and price tier (Case‑Shiller; FHFA HPI; Fannie Mae ESR; CoreLogic).
Can you afford a down payment?
Upfront cash is a common hurdle, but minimums vary by program. Conventional loans allow as little as 3% down for many first‑time buyers (Fannie Mae 97% LTV; Freddie Mac Home Possible), while many other conventional scenarios require 5%+. FHA permits 3.5% down with a 580+ score or 10% down with 500–579 and charges 1.75% upfront MIP plus annual MIP (often 0.55%), with life‑of‑loan duration at minimum down (HUD Mortgagee Letter 2023‑05). VA and USDA loans typically offer 0% down for eligible borrowers (VA; USDA). On conventional loans above 80% LTV, PMI usually runs about 0.5%–1% of the loan amount per year and can be requested for cancellation at 80% LTV (automatic at 78%) under federal rules (CFPB). Median down payments remain modest nationally—8% for first‑time buyers and 19% for repeat buyers (NAR 2024 Profile). Renting generally needs far less cash up front (first month’s rent, a security deposit, sometimes last month’s rent), which helps with flexibility, says BankRate’s Poonkulali Thangavelu.
How healthy is your credit score?
Lenders price and approve based in part on credit. Most conventional loans require a representative score around 620 (CFPB; Fannie Mae Selling Guide). FHA permits 3.5% down at 580+ and requires 10% down with 500–579 (HUD Handbook 4000.1). VA and USDA set no program‑level minimums, but many lenders apply overlays (often near 620) and use residual‑income or automated‑underwriting standards (VA; USDA HB‑1‑3555). In practice, recent purchase loans skew well above minimums—mid‑750s for GSE loans, high‑600s for FHA, and around 700 for VA—per the Urban Institute’s 2025 chartbook (Urban Institute). According to BankRate, stronger credit also improves your rate and mortgage insurance pricing.
Can you afford the hidden costs of homeownership?
If the dishwasher in your rental breaks, your landlord usually fixes it. As an owner, you cover maintenance, repairs, taxes, HOA/condo dues, and insurance. Many planners budget 1%–3% of home value per year for maintenance and capital reserves, plus property taxes that can range roughly 0.5%–2.5%+ of assessed value depending on location. Rising insurance and tax burdens—especially in catastrophe‑exposed states—have become meaningful line items that can tilt the rent‑vs‑buy math (Harvard JCHS 2025).
Also not included in your mortgage: homeowners insurance. The most recent completed national averages from the NAIC are $1,544 for homeowners and $173 for renters insurance (both 2022), and the CPI category for tenants’ and household insurance has shown sustained double‑digit year‑over‑year increases through 2024 and into 2025—evidence that premiums have risen materially since 2022 (NAIC; BLS CPI). Elevated catastrophe losses and reinsurance dynamics have contributed to higher costs and availability pressures in some states (Swiss Re sigma; Aon 1/1/2025; U.S. Treasury FIO 2024).
Renting vs. Buying: Pros and Cons
Snapshot for 2025: Mortgage rates hover in the mid‑6% to low‑7% range (PMMS); national home values are at new highs with mid‑single‑digit year‑over‑year gains (FHFA; Case‑Shiller); asking rents are broadly flat to modestly higher (Apartment List). In many metros that means the monthly cash cost of owning exceeds renting (e.g., a ~$1,400 owner premium on a $400k example), and break‑even often requires 7–10+ years. On the other hand, ownership builds equity and can benefit from appreciation over multi‑year horizons—especially where taxes/insurance are moderate and entry‑level supply is tight amid a ~3.8 million‑home national shortfall (Freddie Mac).
What’s next?
- See our picks for the homeowners insurance and renters insurance, and request quotes early—insurance premiums have posted double‑digit increases according to CPI.
- If you choose to buy, consider a home warranty to protect your belongings. Also budget 1%–3% of home value annually for maintenance and confirm insurance availability if you’re in a catastrophe‑exposed state (see FIO).
