How the math works (methodology)
RentVsBuy 2026 runs a month-by-month, two-portfolio simulation rather than the naive "mortgage payment vs rent payment" comparison you see elsewhere. We track the complete net worth of two identical people — one who buys, one who rents — and find the tipping point where the buyer pulls ahead.
The buyer pays the down payment and closing costs up front, then every month pays principal & interest, property tax, homeowners insurance, maintenance, HOA dues, and PMI (if under 20% down). Their wealth is the home's appreciating value, minus the remaining loan, minus the 6–8% it would cost to sell — because equity you can't access without paying an agent isn't fully yours.
The renter invests the same down payment and closing costs in the market on day one. Every month that renting is cheaper than the full cost of owning, the difference goes into their portfolio too. This is the opportunity-cost engine, and it's why honest models often show renting winning for 5–9 years even when the mortgage payment looks similar to rent. (Symmetrically, in later years when rent has grown past the cost of owning, the buyer banks the difference.)
The breakeven year shown above is the first year the buyer's net worth meets or exceeds the renter's. Sell before it, and renting would have left you richer. Stay past it, and buying wins by a growing margin.
2026 default values embedded in this tool (estimates)
Defaults are editable and labeled. Regional buckets are rough planning figures, not quotes:
| Region | Property tax | Home insurance | Closing (buy) | Appreciation |
|---|
| National average | 1.10%/yr | 0.55%/yr | 3.0% | 3.8%/yr |
| Northeast | 1.85%/yr | 0.50%/yr | 3.5% | 4.0%/yr |
| Midwest | 1.55%/yr | 0.55%/yr | 2.8% | 3.6%/yr |
| South | 0.95%/yr | 0.80%/yr | 2.9% | 3.7%/yr |
| West | 0.75%/yr | 0.45%/yr | 3.2% | 4.2%/yr |
Other embedded constants: estimated 2026 mortgage averages of 6.4% (30-yr) and 5.7% (15-yr); long-run US home appreciation of ≈4.6%/yr (FHFA house-price index, 1991–2025); S&P 500 long-run total return ≈10%/yr nominal; selling costs defaulting to 7% (commission + transfer costs); maintenance rule-of-thumb of 1% of home value per year.
What this model deliberately leaves out
- Mortgage-interest deduction: since the 2017 standard-deduction increase, fewer than 10% of filers itemize, so we exclude it by default. If you itemize, buying looks modestly better than shown.
- Capital-gains tax on investments: excluded on both the renter's portfolio and the home (homes get a $250k/$500k exclusion anyway). This slightly favors the renter at very long horizons.
- The roof-over-your-head dividend: stability, freedom to renovate, no landlord risk. Real, but unpriceable — that's your call, not the spreadsheet's.
Rent vs buy in 2026 — FAQ
Is 2026 a good year to buy a house?
There's no national answer — only a local one. With 30-year rates around an estimated 6.4% and price-to-rent ratios still elevated in much of the West Coast and Mountain West, renting-and-investing wins for longer than most people expect in expensive metros. In much of the Midwest and South, where you can buy for 12–15× annual rent, buying can break even in as little as 3–5 years. Run your actual numbers above; the verdict changes dramatically between a $2,100 rent / $420k price scenario and a $2,800 rent / $750k one.
What's the 5% rule, and is it accurate?
The 5% rule says: multiply the home price by 5% and divide by 12; if rent is less than that, renting is likely cheaper. It bundles ~1% property tax, ~1% maintenance, and ~3% cost of capital. It's a decent napkin check but breaks down when mortgage rates are far from 5%, when appreciation is unusual, or when you stay a long time — which is exactly why a year-by-year simulation like this one is more useful than a single ratio.
Why does my breakeven year jump so much when I change appreciation by 2%?
Because appreciation works on the whole home value while your costs work on fractions of it. On a $420,000 home, the difference between 2% and 4% appreciation is $8,400 in year one alone — more than most people's annual maintenance and insurance combined. That's why the sensitivity chips exist: if your verdict flips from "buy wins in year 5" to "rent wins for 20+ years" on a 2% appreciation swing, your decision is really a bet on your local housing market, and you should treat it that way.
Should I count my home as an investment?
Partially. A primary residence is a leveraged asset that also replaces rent — that rent-replacement is its true dividend. But it's concentrated, illiquid, and expensive to trade (6–8% selling costs vs ~0% for index funds). This calculator treats it honestly: you get full credit for appreciation and equity, but we subtract selling costs from your net worth every year because that's what the equity is actually worth to you in cash.
How should I think about PMI if I can't put 20% down?
PMI (modeled here at an estimated 0.6%/yr of the loan balance) typically costs $130–$200/mo on a median home and disappears once you reach 20% equity. It's not automatically a deal-breaker: buying earlier with 10% down sometimes beats waiting two years to save 20% if prices and rents are rising. Toggle the down payment between 10% and 20% above and compare the breakeven years — that's the real answer for your scenario.
Can I share or save my scenario?
Yes — every input is encoded in the page URL as you type. Click "Copy shareable scenario link" and send it to a partner, friend, or advisor; they'll see exactly the same assumptions and chart. Nothing is uploaded; the entire model runs in your browser.
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Educational tool only — not financial, tax, investment, or real-estate advice. All rates, costs, and growth figures are user-editable estimates; defaults marked "2026" are projections, not quotes. Real outcomes depend on your market, taxes, credit, and timing. Consult a licensed financial advisor, tax professional, or real-estate professional before making decisions. Affiliate and advertisement areas are placeholders.