In 2026, buying costs approximately 50–60% more per month than renting a comparable home in most US markets. However, buying builds equity and long-term wealth. The break-even point — when buying becomes cheaper than renting — is typically 5–8 years depending on your market, down payment, and local appreciation rate. Use the calculator above to find your personal break-even year.

The 5% rule: multiply the home price by 5% and divide by 12. If that number exceeds your monthly rent, renting is likely the better financial choice. The 5% covers ~1% property tax, ~1% maintenance, and ~3% cost of capital. Our calculator goes far beyond this rule with full year-by-year projections and opportunity cost analysis.

Most calculators miss: (1) Opportunity cost — what your down payment would earn invested in stocks, (2) Both buying closing costs (2–5%) and selling costs (6–10%), (3) PMI until you reach 20% equity, (4) True annual maintenance (budget 1–2% of home value), (5) HOA fees, (6) The monthly savings a renter can invest. This calculator includes all of them.

Due to closing costs (2–5% to buy + 6–10% to sell), you typically need to stay 3–5 years minimum for buying to make financial sense. In high-cost markets like San Francisco or NYC, the break-even can be 8–12 years. In affordable Sun Belt markets, it can be as short as 2–3 years. The calculator shows your exact break-even year.

Both paths can build wealth if managed correctly. A homeowner builds equity through mortgage principal payments and home appreciation. A disciplined renter who invests their down payment and monthly savings into a diversified portfolio (historically ~7% annual return) can match or beat homeowner wealth over short timelines. Over 15–20+ years, buying generally builds more wealth — especially in appreciating markets.

PMI (Private Mortgage Insurance) is required when you put down less than 20% on a conventional loan. It typically costs 0.5–1.5% of the loan amount annually — that's $167–$500/month on a $400,000 home with 10% down. PMI automatically cancels when your equity reaches 20%. Our calculator factors this into the monthly buy cost automatically.