Should You Rent or Buy?
The classic personal finance debate has no universal answer — it depends on your local housing market, how long you plan to stay, and current mortgage rates.
The 5-Year Rule of Thumb
Most financial experts suggest buying only makes sense if you plan to stay at least 5-7 years. Why? Because:
- Closing costs (typically 2-5% of the purchase price) are a sunk cost.
- Agent fees on sale (typically 5-6%) eat into your equity.
- Appreciation needs time to compound enough to overcome those transaction costs.
The True Costs of Buying
Monthly mortgage P&I is just the start. Add:
- Property taxes (~1-1.5% of home value annually)
- Homeowner's insurance (~0.5% annually)
- Maintenance & repairs (~1% annually)
- Total overhead: roughly 2.5% of home value per year
Action Plan: Run Your Numbers
- Know your local market: Home prices and rent levels vary enormously by city.
- Model your timeline: The longer you stay, the more buying wins.
- Use our calculator: Try our US Rent vs. Buy Calculator to see which option is cheaper for your exact scenario.
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