One of the most striking financial differences in the U.S. today lies in the net worth of homeowners compared to renters. According to recent data from the Federal Reserve, the median net worth of a homeowner is over 40 times greater than that of a renter. In 2024, homeowners had a median net worth of approximately $396,200, while renters held just $10,400. This significant gap is largely driven by home equity, one of the most powerful and stable tools for building long-term wealth.
Homeownership acts as a forced savings plan. As mortgage payments are made, a portion goes toward reducing the loan balance, gradually increasing the owner's equity. Over time, as property values rise, this equity grows even more—often, creating hundreds of thousands of dollars in wealth. Renters, by contrast, typically spend a similar or even greater portion of their income on housing without gaining any ownership or financial return. While renting can offer flexibility and fewer maintenance responsibilities, it does not provide the wealth-building benefits that homeownership offers.
One hidden fact is if you are renting, you are paying a mortgage! The unfortunate part is you are paying your landlord’s mortgage!
Additionally, homeowners often benefit from tax advantages, such as deductions for mortgage interest and property taxes, as well as long-term price appreciation. These advantages compound over time, making real estate one of the most effective tools for financial security and generational wealth.
When you are introduced to NATE (Net After Tax Effect), your mortgage payment is often cheaper than paying rent.
In summary, while both renting and owning have their place depending on personal goals and circumstances, the long-term financial edge clearly goes to homeownership. For those who can qualify and commit to the responsibility, buying a home remains a powerful step toward financial stability and wealth creation.
Are you thinking about renting because you think you do not have enough cash to buy a new home? FDM can help you buy a home today for less than a security deposit and 1st month rent. If you are in a lease regardless of when it expires, now is the time to stop throwing money away and prepare to purchase a home. Be ready when that dream home comes on the market.
Reach out to us today to learn how our team can get you out of the vicious cycle of renting and making your landlord rich. Regardless of your current situation (income, credit, reserves etc.), we can help navigate a pathway to purchase a home for virtually anyone. Learn to build net worth and possibly net more monthly out of your paycheck.