Renting vs. Buying a Home at 7% Rates—The Real Math

Renting vs. buying a home at 7% interest rates: we run the real math to see which path actually builds more long-term wealth. We track two individuals, Tom and Leo, who start with the same budget to determine the financial impact of their housing decisions over three decades. While home ownership is often framed as the default path to stability, the compounding power of investing the difference between a mortgage payment and rent creates a stark divergence in net worth. The data illustrates that even with rising property values, the opportunity cost of high mortgage rates often outweighs the benefits of buying. By year 30, we see exactly how the investment strategy creates a seven-figure gap, revealing the true trade-offs involved in wealth building when your housing costs dictate your financial future. Subscribe for weekly personal finance breakdowns, and comment below whether you would prioritize the flexibility of renting or the stability of owning a home. Chapters 0:00 Is renting throwing money away? 0:50 The setup: Tom buys, Leo rents 1:58 The real monthly cost of owning 2:52 Where Tom's payments really go 3:35 The mortgage tax break 4:08 After one year 4:54 What if you have to move? 5:21 Years 5 to 20 6:56 Year 30: the final score 7:46 Why the renter won 8:32 Does Leo actually invest? 9:24 The price-to-rent test 10:11 Investment returns and mortgage rates 11:15 What a spreadsheet misses 11:51 The verdict