Mortgage vs. Rent: The Real Monthly Math

Start with the number everyone actually wants: on a $400,000 home with 20% down at 6.5%, the mortgage payment is $2,022.62 a month. Put down 10% instead and it climbs to $2,275.44 — not because you borrowed a little more, but because the interest is now compounding on a bigger balance for the same 30 years. That gap, roughly $250 a month, is the actual price of the smaller down payment, and it's worth running through the mortgage calculator yourself before assuming a lower down payment is the "affordable" option. Sometimes it's just deferred cost.

Here's the part most comparisons skip: that $2,022.62 isn't your real monthly cost of owning the home. Property taxes, homeowners insurance, and — if you put down less than 20% — PMI all sit on top of it, usually adding somewhere between $400 and $800 a month depending on your location and tax rate. A landlord's rent number, by contrast, already has all of that baked in. Comparing a bare mortgage payment to a rent number is comparing two different kinds of totals, and it makes buying look cheaper than it is.

The maintenance line nobody budgets for

Renters have a landlord who eats the cost when the water heater dies. Owners don't. The commonly cited rule of thumb is 1% of the home's value per year in maintenance and repairs — on a $400,000 house, that's roughly $333 a month, and it doesn't arrive evenly. Some years it's replacing a $40 faucet washer. Some years the roof needs $12,000 of work in a single month. Renters get a predictable number. Owners get an average that hides genuinely unpredictable spikes, and the people who get caught out by this are usually the ones who budgeted the mortgage payment and nothing else.

What renting actually buys you

None of this is an argument that renting is smarter. It's an argument that the two options aren't as directly comparable as a single "which is cheaper" number implies. Renting buys flexibility — you can leave in a year if the job changes, the neighborhood doesn't work out, or life just goes sideways, without a real estate transaction attached to the decision. Buying buys equity — every principal payment is money that comes back to you later, which is not true of a single dollar of rent. Which of those matters more depends on how long you actually expect to stay, and that's the single biggest variable most people underweight.

As a rough anchor: the often-cited break-even point for buying versus renting is somewhere around 3 to 5 years in a stable market — stay shorter than that and closing costs and selling costs on the home tend to eat whatever equity you built. Stay considerably longer, and owning tends to win outright. Right around that 3-to-5-year mark is genuinely a toss-up, and no calculator can tell you which side of that line your specific life will land on.

The down payment question is really two questions

Whether to put down 10% or 20% gets asked as one question, but it's actually two: can you afford the higher monthly payment that comes with putting down less, and do you want to tie up that extra cash in a house instead of keeping it liquid. PMI on a 10%-down loan is an added cost, but it's not necessarily an irrational one — it can be the difference between buying now at today's price or waiting years to save the remaining 10%, during which prices and rates can both move against you. There's no universally correct answer here. There's only your own math, run through the down payment calculator with your actual numbers, not a stranger's example.

A quick gut check either way

If you're currently renting and thinking about whether you could afford to buy, a reasonable first move is checking your number against the standard affordability guideline — most lenders and planners still lean on keeping housing costs at or under roughly 30% of gross income, which you can check quickly with the rent affordability calculator. It's built around rent specifically, but the same 30% ceiling is a reasonable starting sanity check for a full mortgage payment too, once you've added taxes, insurance, and a maintenance buffer on top of the raw loan payment.

None of this replaces talking to a lender or a financial advisor about your specific situation — this is the shape of the decision, not a substitute for running your own numbers with someone who can see your full financial picture.