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What tips the balance
- Time. Buying and selling costs are paid once, so every extra year you stay spreads them thinner.
- Price-to-rent ratio. Home price ÷ yearly rent. Below about 15 tends to favor buying; above about 20 tends to favor renting.
- Home price growth vs investment returns. Buying wins when the home grows faster than the renter's investments after costs.
- Interest rate. Higher rates raise the owner's monthly cost and make renting relatively cheaper.
Assumptions
- Both paths start with the same cash; whoever has lower monthly housing costs invests the difference.
- Mortgage interest and property tax deductions are ignored — with the 2026 standard deduction ($16,100 single, $32,200 joint), most buyers don't itemize.
- Investment returns are after tax. Selling costs are paid at the end of the horizon.
- Maintenance and property tax grow with the home's value; insurance and HOA are flat.
Frequently asked questions
Is it better to rent or buy in 2026?+
It depends mostly on how long you'll stay, the price-to-rent ratio where you live, and mortgage rates. Buying has large one-time costs (closing and selling costs of roughly 8–10% combined), so it usually needs several years to beat renting and investing the difference.
How is the comparison made?+
Both paths start with the same cash. The buyer spends it on the down payment and closing costs; the renter invests it. Each month, whoever has lower housing costs invests the difference. After your time frame we compare net worth: home equity after selling costs versus the renter's investments.
What's the break-even year?+
The first year after which buying stays ahead of renting for the rest of your time frame. If you expect to move before then, renting is likely cheaper.
Does this include the mortgage interest deduction?+
No. With the 2026 standard deduction at $16,100 single and $32,200 married filing jointly, most homeowners don't itemize, so the deduction rarely changes the answer.
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Last reviewed October 15, 2026. Calculator version 1.0.0. Results are estimates for educational purposes, not financial, tax or lending advice. How we check our numbers.