Compare building home equity against investing your down payment and the monthly cost gap over time.
Renting
Buying
Year-by-Year Comparison
| Year | Annual rent | Owner cost | Home equity | Renter portfolio |
|---|
Practical tips & common mistakes
Horizon drives the answer
Buying often loses on 2–3 year horizons after closing costs. Model at least 5–7 years before calling buying a win.
Ignoring rent inflation
Rent rises over time; fixed-rate P&I does not. Long horizons tilt toward ownership when maintenance is budgeted.
Opportunity cost of down payment
Down payment invested at conservative returns is foregone — include it in the buy column, not just closing check.
Tax deductions
Standard deduction limits mortgage interest benefit for many filers post-TCJA. Do not assume full interest deductibility.