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You're wondering whether to keep renting or buy a place
Renting and buying are different financial structures, not better and worse choices. Renting buys flexibility and a capped monthly cost. Buying builds ownership over time and carries risks and expenses that renters never see.
The common advice that renting is throwing money away is wrong. This section walks through what owning actually costs and how long you need to stay for buying to make sense.
Plan on about 1% of a home's value each year for maintenance. On a $280,000 house that's $2,800 a year, and it doesn't arrive evenly — nothing for two years, then a $9,000 roof.
Widely used planning rule of thumb, not a guarantee. Older homes typically run higher.
What buying costs before you own anything
The down payment gets all the attention, and it's not the whole story.
Twenty percent down is not the norm for first-time buyers. In the National Association of Realtors’ 2025 profile of recent buyers, the median first-time buyer put down 10%. Putting down less than 20% usually means paying private mortgage insurance, which is covered below, but it is how most first homes are bought.
Closing costs typically run several percent of the purchase price, covering loan origination, appraisal, title insurance, and taxes. On a $280,000 house that's often well over $8,000, due at signing on top of your down payment.
Then there's inspection, moving, and the fact that an empty house needs things a furnished apartment didn't.
The mortgage payment is not the housing cost
Your monthly obligation includes principal and interest, plus property taxes, plus homeowners insurance, and often private mortgage insurance if you put down less than 20%. HOA dues if applicable.
Then maintenance, which has no bill and arrives anyway. A common planning rule is to set aside about 1% of the home's value each year. On a $280,000 house that's $2,800 annually, and it's lumpy — nothing for two years, then a $9,000 roof.
When your rental's water heater fails, you text the landlord. When yours fails, it's $1,600 and it's Tuesday.
The five-year question
Buying and selling both cost money. Between closing costs going in and agent commissions and fees going out, you need enough time or enough appreciation to clear that spread before you're ahead.
The common rule of thumb is five years. Sell in year two and you can easily walk away with less than you put in, even in a rising market.
So the real question isn't 'can I afford the payment.' It's 'am I confident I'll want to be in this city, this job market, and this house in five years.' At 23, that's a hard yes for some people and an honest no for most.
Agent commissions became more openly negotiable following industry changes in 2024, so ask about them directly rather than assuming a standard rate.
What renting actually buys
Mobility, which matters most exactly when your career is moving fastest. A capped cost with no surprise repairs. No exposure if local prices fall. And time to build savings and credit so that when you do buy, you buy on better terms.
Taking a job in another city is a phone call when you rent and a months-long process when you own.
It is also worth knowing how late first homes now come. In the same NAR report the median first-time buyer was 40 years old, a record high, up from the late twenties in the 1980s, and first-time buyers were just 21% of all buyers, the lowest share since tracking began in 1981. If you are 24 and renting, you are not behind. You are normal.
Get ready before you're ready
If buying is a goal, the work starts years earlier: a credit score good enough to earn a low rate, savings for down payment and closing and a cushion after, a debt-to-income ratio lenders will accept, and stable income history.
Look into first-time buyer programs in your state — many offer down payment assistance, and plenty of buyers never find out they qualified. HUD-approved housing counseling agencies provide free or low-cost guidance, and that's a real resource most people don't know exists.
One caution from that report: 26% of first-time buyers drew on financial assets such as a 401(k), an IRA or stocks for their down payment. Pulling from retirement savings early can mean taxes and penalties and years of lost compounding. Ask a housing counselor about assistance programs before you touch retirement money.
What you can do
- Price the full monthly cost: principal, interest, taxes, insurance, PMI, HOA, and 1% a year for maintenance.
- Add closing costs to your savings target — several percent of purchase price.
- Answer honestly whether you expect to stay five years.
- Check your state's first-time buyer and down payment assistance programs.
- Talk to a HUD-approved housing counselor before talking to a lender.
- Get quotes from three lenders, including a credit union.
Where to check this yourself
hud.gov for housing counselors and first-time buyer programs. consumerfinance.gov for mortgage comparison tools and closing disclosure explainers.