Buying vs. Renting:
Should I wait for interest rates to drop?
By Andy Totman | Totman Real Estate | October 26, 2026 | Richmond, VA.
There are pros and cons to both. Depending on your financial situation, lifestyle, and future plans, either option could be the right decision.
When renting, one of the biggest advantages is that the property owner is generally responsible for maintaining the property’s structure and keeping essential systems in good working order. When you own a home, those responsibilities fall on you. The more important question may be whether purchasing a home makes financial sense for you today, based on your income, savings, and long-term plans. But there’s another major factor that weighs heavily on the minds of many first-time homebuyers: today’s mortgage interest rates.
Are Today’s Mortgage Interest Rates Really That Bad?
As of October 26, 2026, some published 30-year mortgage rate averages were around 7.1%, depending on the source. Many first-time buyers say to me, “I’ll just wait until interest rates come down.” I’ll explain “many first-time homebuyers said the same thing last year. In late October 2025, the average 30-year fixed mortgage rate was approximately 6.2%. Some people decided to go ahead and purchase, and they’re thankful they secured a rate around 6.2%”. If we go back another four years, to October 21, 2021, the average was around 3.09%.
Naturally, we’d all prefer a lower rate. But waiting for lower interest rates doesn’t guarantee they’ll arrive anytime soon. And if rates decrease, you can always look into refinancing for that lower rate. Another factor is that home prices could very well increase in the meantime. Does that mean a mortgage rate of 7% or even 7.5% is a bad rate? Absolutely not. I’m sure you’re thinking I’m absolutely crazy for saying this. However, keep in mind, when you’re renting, 100% of your monthly rent pays for housing without building any ownership equity for yourself. When you own a home with a mortgage, a portion of every principal-and-interest payment goes toward building equity for your future. Over time, that equity can become one of your most valuable financial assets. Now 7.5% doesn’t seem so bad.
Renting vs. Buying: Let’s Look at Some Actual Midlothian Properties
Rather than relying on national averages, I decided to look at properties right here in our own backyard. I researched three apartments available for rent and three single-family homes listed for sale in the Midlothian area, generally east of Route 288, north of Route 60, and south of Route 711. Here’s what I found.
Three Apartments Available for Rent
| Apartment | Size | Bedrooms / Baths | Monthly Rent |
| Apartment 1 | 1,000 sq. ft. | 2 BR / 2 BA | $3,000 |
| Apartment 2 | 1,318 sq. ft. | 2 BR / 2 BA | $2,680 |
| Apartment 3 | 1,269 sq. ft. | 2 BR / 2 BA | $2,331 |
| Average | 1,196 sq. ft. | $2,670 |
Three Single-Family Homes Available for Purchase
| Home | Size | Bedrooms / Baths | Asking Price |
| House 1 | 1,299 sq. ft. | 3 BR / 2 BA | $361,000 |
| House 2 | 1,344 sq. ft. | 3 BR / 2 BA | $370,000 |
| House 3 | 1,704 sq. ft. | 4 BR / 2.5 BA | $389,000 |
| Average | 1,449 sq. ft. | $373,333 |
What Would It Cost to Purchase a $373,333 Home?
Comparing a rental payment with a home purchase price doesn’t tell us very much by itself. Let’s break down the actual monthly costs. Let’s use our average purchase price of $373,333 and assume a first-time homebuyer qualifies for a mortgage with a 3.5% down payment. That would require approximately $13,067 upfront for the down payment, before closing costs and other expenses. Here’s a mock illustrative monthly payment breakdown, using a 30-year mortgage at approximately 7.12% interest.
| Monthly Expense | Estimated Cost |
| Principal and interest | $2,426 |
| Property taxes | $277 |
| Homeowners insurance | $199 |
| Mortgage insurance (estimate) | $305 |
| Total estimated payment | $3,207 |
These are illustrative financing estimates. Actual payments depend on the loan program, interest rate, property taxes, insurance, and borrower qualifications. Mortgage insurance costs and requirements vary by loan type. Maintenance expenses and any homeowners association fees would be additional. The property-tax estimate assumes a Chesterfield County assessment equal to the $373,333 purchase price, using the county’s 2026 tax rate of $0.89 per $100 of assessed value. The $305 mortgage-insurance amount is illustrative, not a lender quote.
That’s approximately $537 more per month than the average apartment rental in our comparison. I know what some may be thinking. “Andy, why would I want to pay $537 more every month when I could just rent?” That’s a great question! Another great question is: How much interest will I pay on this loan over 30 years? A $373,333 house with 3.5% down brings us to a loan amount of approximately $360,266. Now, at 7.12% over 30 years, you will pay roughly $513,000 just in interest. You might be saying, “WHAT! That’s ridiculous! That’s more than half a million dollars just in interest!” You’re absolutely correct. That is a lot of money. While we are at it, why don’t we calculate how much money will be spent on rent over 30 years?
What Happens to Your Money Over 30 Years?
This is where the numbers become especially interesting. Let’s assume you’re renting an apartment for only $2,670 per month. We’ll keep the comparison simple. Let’s assume your rent never increases over the next 30 years. Yeah! That would be nice! Not very likely, though. For now, let’s just pretend. This gives the renting scenario a huge benefit. I would even say it’s outright cheating.
How much will you pay in rent over 30 years?
$2,670 × 12 months = $32,040 per year. $32,040 × 30 years = $961,200 in total rent. That’s nearly $1 million in rent! And that’s assuming your rent never increases. Hmm, maybe 7% doesn’t seem so bad after all.
Now, to be fair, that rent provides 30 years of housing, and renters generally avoid many of the maintenance costs associated with homeownership. But at the end of those 30 years, the renter doesn’t own the property. The property owner does.
What About the Homeowner?
As mentioned above, a $360,266 loan at 7.12% over 30 years will cost approximately $513,000 in interest. Including repayment of the original principal, the total principal-and-interest payments over 30 years add up to approximately $873,000. That doesn’t include property taxes, insurance, mortgage insurance, maintenance, or any homeowners association fees, so it isn’t a direct comparison of the total costs of renting and owning. Here’s the important difference: each mortgage payment also reduces the outstanding loan balance. In the beginning, a relatively small portion goes toward principal. As time passes, that portion increases. If the homeowner makes all the scheduled payments, after 30 years the mortgage is paid off. They own their home free and clear of that mortgage. They’ll still have property taxes, insurance, maintenance, and other ownership expenses, but they no longer have that monthly mortgage principal-and-interest payment.
What Could That $373,333 Home Be Worth in 30 Years?
Real estate has historically appreciated over long periods of time. Let’s explore what our $373,333 home could be worth if it appreciates at an average annual rate of 3% or 4% per year.
At 3% annual appreciation: Approximately $906,000 after 30 years.
At 4% annual appreciation: Approximately $1,211,000 after 30 years.
These are hypothetical appreciation scenarios, not guaranteed future property values.
In our example, the renter could pay approximately $961,200 over 30 years, assuming rent never increases. Meanwhile, the homeowner could potentially own a property worth around $900,000 to $1.2 million, assuming those appreciation scenarios materialize. I find that comparison pretty remarkable. But there’s an important distinction: The home’s future value isn’t the same thing as pure profit. Also, the renter may have been able to save and invest the difference between renting and owning. Still, the opportunity to build equity and eventually own a valuable asset is one of the biggest reasons I believe homeownership deserves serious consideration.
Does Renting Ever Make More Sense?
Absolutely! There are plenty of situations where renting may be the smarter decision. For example, if you’re moving to Richmond for a temporary job assignment or expect to relocate within a year or two, purchasing a home may not be the right choice. Another major consideration is the down payment. In our example, the down payment alone was approximately $13,067. For many first-time homebuyers, that’s a significant amount of money. That’s before closing costs, moving expenses, and the savings you’ll want to keep available for unexpected repairs. Having a smaller monthly payment in order to save up absolutely makes sense.
So, Should You Rent or Buy?
That depends on you. If you enjoy flexibility, expect to relocate soon, or aren’t financially ready for homeownership, renting may be the better choice. If you’re planning to stay in the Richmond or Midlothian area for several years, have a stable income, and can comfortably afford the full cost of owning a home, purchasing may be worth exploring.
You don’t always need a 20% down payment to purchase a home. Many qualified buyers may be eligible for mortgage programs with lower down payment requirements or even down payment assistance. If you’re curious about where you stand financially, I recommend reaching out to Mercury Mortgage, a great local Richmond company. A simple, easy conversation that can help you better understand your purchasing power, how much you may need for a down payment, and even ways to improve your credit score to put you in a stronger position to buy a home.
My advice is simple: Don’t make your decision based solely on today’s interest rate or the difference in monthly payments. Consider what you want your financial situation to look like five, ten, or even thirty years from now. Sometimes the real question isn’t simply how much you’re paying each month. It’s what you’re getting in return.
Let’s Talk About Your Options
At Totman Real Estate, we enjoy helping first-time buyers understand the home-buying process and explore opportunities throughout Richmond, Midlothian, Chesterfield County, and the surrounding communities. Whether you’re ready to purchase your first home or just beginning to wonder if buying makes sense, we’re happy to help you understand the numbers and your options.
No pressure. Just straightforward information to help you make the decision that’s right for you.
Andy & Tamara Totman
Totman Real Estate
Greater Richmond, Virginia
Disclaimer: This article is for general educational purposes. The property examples and financing assumptions are illustrative and are not guaranteed market prices, lender quotes, tax advice, or investment projections. Property values, mortgage rates, rental costs, taxes, and insurance premiums can change. Consult a qualified mortgage professional for estimates based on your individual circumstances.
