I am considering moving to the US, and am weighing the pros and cons of renting versus buying once I know the location where I will live a bit better. I have no interest in buying immediately and will rent for about a year.

I am wondering if my back of the envelope math is right, which then will lead to a conclusion that will help me determine whether to buy or just keep renting indefinitely.

Here's my train of thought.

Houses in the area are going for about USD 1 Million (stupid price, that is generally the bottom of the market). According to an amortization calculator I found, I get this for the first year (in rounded yearly numbers):

Mortgage payment: $60,000;

of which, principal is: $15,600; and

interest is: $31,080

Another back of the envelope calculation gives me an effective tax rate of 30% (rounded again). This would mean that of my yearly $60,000:

$15,600 is my equity build-up

$31,080 (i.e. 80% of goes up in smoke)

**In my mind, if I rent a place for under $31,080 a year, I would be better off renting instead of buying.** I know this is Heresy for middle class Americans, but **is the basic math wrong?**

The above assumes that additional costs and benefits of homeownership (transaction costs, insurance, appreciation, maintenance, etc.) and the investment yield of down payment plus the difference between rental and mortgage costs more or less balance out.

On a monthly basis, I know that a house with a $5,000 mortgage would be nicer than a condo rented for $2,600. I am setting that aside for the moment.