Question 1

Is it better to rent or buy in 2026?

Accepted Answer

It depends on how long you plan to stay and your local market. Buying wins long-term (7+ years) in most markets due to equity building. Renting is better short-term, in high-cost cities, or if you invest the saved down payment.

Question 2

What is the break-even point for buying a home?

Accepted Answer

The break-even point is when total buying costs equal total renting costs. This typically ranges from 3 to 7 years depending on your mortgage rate, home appreciation, local rent prices, and transaction costs.

Question 3

What are the hidden costs of buying a home?

Accepted Answer

Hidden costs include property taxes (1-2%/year), home insurance ($1,500-$3,000/year), maintenance (1%/year), closing costs (2-5% of price), and PMI if under 20% down. These add $10,000-$20,000/year on a $400K home.

Question 4

Does renting throw away money?

Accepted Answer

Not necessarily. In year 1 of a $400K mortgage at 7%, over $33,000 goes to interest, taxes, insurance and maintenance — not equity. Renting a similar home for $2,500/month costs $30,000. Renting is often cheaper in the first 3-5 years.

Question 5

What is the 5% rule for renting vs buying?

Accepted Answer

Multiply home price by 5% and divide by 12. If your monthly rent is less than this, renting may be financially better. Example: $400K x 5% = $20,000 / 12 = $1,667/month. Rent under $1,667 suggests renting wins financially.

Market Type	Break-Even	Examples
Affordable	3–4 years	Cleveland, Memphis
Mid-tier	5–6 years	Atlanta, Phoenix
Expensive	7–10 years	Denver, Seattle
Ultra-expensive	12+ years	NYC, SF, LA

Cost	Amount	Equity?
Mortgage interest	$22,500	No
Property taxes	$5,200	No
Insurance + maint.	$5,800	No
Principal paid	$5,460	Yes

Down %	On $400K	Monthly PMT	PMI
3.5% FHA	$14,000	$2,525	+$175/mo
10%	$40,000	$2,278	+$140/mo
20%	$80,000	$2,130	None

Rent vs Buy Calculator 2026

Break-Even by Market

True Year-1 Cost ($400K Home)

Down Payment Required

Rent vs Buy Calculator 2026

Break-Even by Market

True Year-1 Cost ($400K Home)

Down Payment Required

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