There’s an age-old debate about whether owning or renting a home is cheaper. When you factor in your hierarchy of needs, it doesn’t make much sense to spend all of your money on shelter if it means you won’t be able to afford food. Whether it’s paying rent each month or figuring out a mortgage payment, there’s no way around the fact that either option comes with quite a few costs to consider.

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Homeownership, for example, typically comes with more upfront costs than renting. The monthly payment can also be higher than rent, though that depends on quite a few factors. Renting, meanwhile, tends to be cheaper at first but comes with the added risk of rent hikes and other apartment or community add-ons (like a VIP trash pickup service or pet rent).

If you’re debating whether to buy or rent a home next year, here are some things to consider .

Renting a Home Could Be Cheaper

The cost of rent in the United States depends on factors like location, construction quality, square footage, number of rooms and whether you’re going for an apartment or a house.

According to Rentcafe, the average cost of a 901-square-foot apartment is $1,736. However, in some places, like New York City or many parts of California or Washington, it can be much higher. As for house rentals, Zillow found that the median rent in the U.S. is $2,100, slightly up from last year.

“Renting is the cheaper option, especially in today’s market,” said Mike Roberts, a mortgage broker, loan originator and co-founder of City Creek Mortgage .

“Renting costs about 38% less than buying a home on average across the U.S. This gap is even wider in major cities like San Francisco and Los Angeles, where mortgage payments can be over double the rent for comparable properties.”

So, when you are breaking down your budget and your ultimate bottom line, figuring out where you can save or even make an investment more affordable is an important financial decision.

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Cost of Buying a Home in the U.S.

The Federal Reserve Bank of St. Louis put the national average sales price of homes at $503,800 as of the beginning of 2025. In comparison, the average sales price of homes sold in the country was $498,300 a year prior, which is a $5,000 difference.

While the housing market has had its ups and downs, home prices tend to rise over time. The same can be said for most rental markets, but the difference is that homeownership comes with more costs than rent.

“You have to look beyond just monthly payments. There are so many other costs of homeownership right from property taxes, maintenance, insurance and [homeowners’ association (HOA)] fees. All of these can add up quickly,” said Roberts.

“You might find yourself spending an extra $500 to $600 monthly when these costs are factored in. So, make sure to calculate those additional expenses into your budget.”

When buying a home, be prepared to pay certain upfront fees that don’t come with a rental. Two of the most common expenses according to the U.S. Department of Housing and Urban Development are:

Cost of Renting a Home in the U.S.

Of course, you’ll still have to pay for certain things as a renter, too.

Many landlords require a deposit which, depending on the property and your credit score, could be quite high — often at least one full month’s rent upfront, if not more. You may also have to pay for things like trash service, reserved parking, pet rent and a whole host of other small fees.

Some renters have to pay certain “junk fees” that increase the overall cost. This could include repeat application fees that, over the course of searching for a rental property, can end up being hundreds of dollars. Junk fees may also include things like mail sorting or “January fees,” which are charged at the start of the new year.

While you won’t have interest to worry about, rent can still add up. Say you rent an apartment for 30 years. Assuming you pay $2,000 a month and the rent never changes, you’d pay $720,000 in total rent payments. This doesn’t include any additional or junk fees. You also won’t build equity.

Weighing Your Options

Ultimately, renting might be the cheaper option — even if it doesn’t seem like it at first.

“I think there are circumstances in which renting can be more expensive than buying, and vice versa. One is not always less expensive than the other,” said Seamus Nally, CEO of TurboTenant .

“But I would probably say that renting often turns out to be less expensive. When you rent, there are lots of things you are not financially responsible for.

Nally continued, “Oven breaks and needs replacing? That’s on the property owner. If you are the owner, that means it’s on you. When you rent, most maintenance and upkeep costs are in the hands of the property owner and not you, and that can result in you being able to avoid paying thousands of extra dollars per year.”

That said, you might also want to look beyond the numbers.

Renting a home can be beneficial if you’re not ready to settle down yet, or you’re unprepared for the upfront and ongoing costs of homeownership. But buying a home gives you the chance to build equity without the fear of rent hikes. You might still have to deal with increasing property taxes and insurance premiums, so be sure to budget those in.

If you’re still debating, run the numbers a few times.

“I suggest creating a simple spreadsheet that lists all possible costs associated with owning a home, versus what you currently pay in rent,” said Roberts. “It’ll give you a very accurate picture of your financial situation and help you make an informed decision.”

Caitlyn Moorhead contributed to the reporting for this article.

Editor’s note: Information is accurate as of Jun. 9, 2025 and is subject to change.

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This article originally appeared on GOBankingRates.com : Renting Vs. Owning a Home: Which Is Cheaper in 2025?