Twenty questions, answered with numbers

Every answer here comes out of the same model the calculator runs, at the same defaults - so none of them can drift from what the page in front of you says.

See the methodology Answers cite the model, not opinion Last updated August 28, 2026

Answers use the default scenario: $2,100 rent against a $420,000 home at 6.5% over 10 years

Renting and investing wins by $67,000, and buying takes over above $2,468 a month in rent

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The answer people came for

Is it cheaper to rent or buy in 2026?
At 2026 rates, renting usually wins on pure finances. Our model's default scenario — $420,000 home, $2,100 comparable rent, 20% down, 6.5% mortgage, 10-year stay — ends with the renter who invests the difference about $67,000 ahead; at a 4% rate, buying wins by about $38,000 instead. The answer is a ratio between rent, price, and rate — run yours.
How high does rent have to be before buying wins?
For our default $420,000 home over a 10-year stay, the tipping-point monthly rent is $1,890 at a 4% mortgage, $2,117 at 5%, $2,350 at 6%, $2,468 at 6.5%, $2,587 at 7%, and $2,829 at 8%. Below those rents, renting the comparable home wins; above them, buying does — and each point of mortgage rate demands about $235 more monthly rent to justify buying.
How long do I need to stay for buying to make sense?
Five years is the usual floor: round-trip transaction costs — about $46,000 in the default scenario — need years of appreciation to absorb. But tenure can't fix a bad ratio: at 6.5%, renting wins at 5 years (~$49,000), 10 (~$67,000), and 30 (~$389,000), while at 4% buying breaks even in year 6. Time amplifies the winner; more in when does buying beat renting.

The three big myths

Is rent money wasted?
No more than mortgage interest, property tax, insurance, and maintenance are — that money is gone either way. In year one of our default scenario the owner pays $3,067 a month, of which only $304 builds equity; the renter pays $2,115 all-in, $648 less. Whoever wastes less invests the difference, and that compounding — not the slogan — decides who ends up wealthier.
Is a house a better investment than stocks?
As a pure asset, no. Long-run US data (the FHFA house-price index versus S&P 500 total returns) puts house-price growth several points below equities; our model conservatively assumes 3% and 7%. A home fights back with leverage and the rent you stop paying, but it costs about 2.7% of its value a year to hold — and the default leveraged house still trails the renter's portfolio by about $67,000 over 10 years.
Do mortgage tax deductions make buying worth it?
Rarely, since the 2018 tax law. Deductions help only where itemizing beats the standard deduction — $16,100 single, $32,200 joint in 2026 — and year-one mortgage interest in our default scenario is about $21,700, which doesn't clear the joint bar, so its tax value is zero. Our model prices the difference exactly, including the $40,400 SALT cap and $750,000 interest limit; even a $1.1M home for genuine itemizers lost by about $561,000 over 15 years.

What owning actually costs

What does owning really cost per month?
Roughly 40-50% more than the mortgage payment. Principal and interest on the default $420,000 home is $2,124 a month; the true year-one cost is $3,067 once property tax, insurance, and maintenance are added. That extra $943 a month — about 2.7% of home value a year — continues even after the mortgage is gone. Comparing sticker P&I to rent is the classic rent-vs-buy error.
How much of a mortgage payment is interest?
Early on, nearly all of it. On our default $336,000 loan the payment is $2,124; the first month's interest is $1,820 — 86% — leaving $304 for equity, and principal doesn't overtake interest until about year 19. Held 30 years, total interest reaches about $429,000, more than was borrowed. Short stints build little equity while transaction costs pile up.
How does PMI change the math if I put less than 20% down?
PMI protects the lender, not you — pure unrecoverable cost. Our model defaults to 0.6% of the loan a year: $189 a month on the $378,000 loan a 10% down payment leaves. You can request cancellation at 80% loan-to-value and it must end at 78%; our calculator cancels it automatically, so low-down-payment scenarios are penalized exactly as long as they should be. Full mechanics in how PMI actually ends.
How much do closing and selling costs matter?
They're the main reason short stays favor renting. Our model charges 3% of the price to buy ($12,600 on the default home) and 6% of the sale price to sell — about $34,000 when the home sells for $564,000 in year 10. That $46,000 round trip is two-thirds of the renter's entire $67,000 margin. The line items are in what selling a house really costs.

Timing, rates and the long run

What does break-even year mean?
The first year the buyer's net wealth — equity minus selling costs and taxes — catches the renter's portfolio and stays ahead. At a 4% mortgage our default scenario breaks even in year 6; at 6.5% there is no break-even — the renter's lead grows from about $49,000 at year 5 to $389,000 at year 30, which means the rent is too cheap relative to the price and rate.
Do mortgage rates really flip the answer?
More than any other input. Same house, same rent, same stay: at 6.5% renting wins by about $67,000; at 4% buying wins by about $38,000 — a $105,000 swing from the rate alone. The 6.5% verdict is robust in our sensitivity tests; the 4% verdict sits on a knife edge. The current landscape is in rent vs. buy in 2026.
What if I stay forever and never sell?
It eliminates selling costs and future rent hikes — but it gives compounding maximum runway, and compounding favors the higher-return asset. In our default scenario the renter's lead grows from about $67,000 at 10 years to $389,000 at 30; at a 4% mortgage buying leads from year 6 on. A lifetime stay locks in whichever side your numbers already favor.
What happens after the mortgage is paid off?
Housing gets cheaper, not free. The $2,124 payment disappears after year 30, but property tax, insurance, and maintenance — $943 a month in year one — continue and grow with the home's value, while the renter's rent has compounded for three decades. Our model keeps simulating past payoff and invests the owner's freed-up cash flow, which is when owning's advantage kicks in.

The rules of thumb, tested

What is the 5% rule for rent vs. buy?
Ben Felix's shorthand (PWL Capital, 2019): unrecoverable ownership costs run about 5% of home value a year, so if annual rent is under 5% of the price — monthly rent below price ÷ 240, or $1,750 on $420,000 — renting is favored. Our model shows the threshold moves with rates: $1,890 at 4% but $2,468 at 6.5% — effectively a 7% rule. Details at the 5% rule calculator.
What price-to-rent ratio favors buying?
Price-to-rent is home price divided by annual rent. At a 6.5% mortgage over 10 years, our model had buying win at a ratio of 11.5 ($220,000 home, $1,600 rent), lose at 16.7 ($420,000, $2,100), and lose by about $561,000 at 24 ($1.1M, $3,800); the breakeven sits near 14 and slides lower as rates rise. Compute yours with the price-to-rent calculator.

The model, and where it stops

How does the calculator handle opportunity cost?
Symmetrically — its most important design choice. The renter invests the skipped down payment and closing costs plus the monthly savings whenever renting is cheaper; whenever owning is cheaper, the owner invests the difference too. Most calculators only credit the renter. We also tax the portfolio's gains at the end. The model is documented at /methodology and verified by 146 automated tests, including 10 independently computed audit scenarios.
Why does renting win in expensive cities and buying win in cheap markets?
Because rents don't scale with prices. A $1.1M home renting for $3,800 — 0.35% of the price a month — has renting ahead by about $561,000 over 15 years, even for a couple who itemizes; a $220,000 home renting for $1,600 — 0.73% — flips to buying at the same rate. The rent-to-price ratio, not the price tag, is the signal. More in is buying always better than renting.
Does buying with all cash change the answer?
It changes the numbers, not the logic. Cash removes interest and PMI but maximizes opportunity cost: $420,000 not invested at 7% forgoes about $406,000 of growth over 10 years, while the house gains about $144,000 at 3% appreciation. Set the down payment to 100% and our calculator prices it directly. High rates make cash relatively more attractive; they don't repeal opportunity cost.
Does the calculator work outside the US, in other currencies?
Yes. The engine is currency-agnostic — eight currencies built in, and every input is just a number. The US-specific layer is taxes: the standard-versus-itemized logic, the $40,400 SALT cap, the $750,000 mortgage-interest cap, and the Section 121 exclusion — each can be zeroed or set to your country's rates. The ratios and opportunity costs that decide most outcomes are universal. Run your own numbers.

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