Rent vs. Buy in 2026: How to Actually Run the Numbers
Not a gut call — a math problem with a real answer once appreciation, equity, and opportunity cost are all on the table.
In a worked 7-year comparison — $2,200/month rent versus a $380,000 home purchase — buying came out about $30,510 cheaper once appreciation, equity, and the opportunity cost of the down payment were all factored in. The result flips easily with a shorter timeframe or different assumptions, which is exactly why it's worth running your own numbers rather than trusting a rule of thumb.
Test your own scenario with our rent vs. buy calculator.
"Renting is throwing money away" and "buying is always the smart long-term move" are both oversimplified. Rent vs. buy is a genuine math problem — one with an answer that depends heavily on your specific numbers and how long you'll stay. Here's a full worked comparison that accounts for the pieces a simple monthly-payment comparison leaves out.
What a Real Comparison Has to Include
Comparing a rent check to a mortgage payment alone misses most of the picture. A complete comparison needs:
| Side | What to include |
|---|---|
| Renting | Total rent paid over the period, with realistic annual rent growth applied |
| Buying | Down payment, closing costs, every mortgage and ownership-cost payment, minus home equity built (value minus remaining loan minus selling costs), plus the opportunity cost of the cash tied up in the down payment |
Worked Example: 7 Years
$2,200/month rent (3% annual growth) vs. a $380,000 home, 20% down, 6.75% rate on a 30-year loan, 3.5% annual appreciation, 3% closing costs, 6% selling costs, and a 6% assumed return on money not spent on the down payment:
| Line item | Result |
|---|---|
| Monthly principal & interest | $1,971.74 |
| Total rent paid over 7 years | $202,289 |
| Home value after 7 years (3.5%/yr appreciation) | $483,466 |
| Remaining loan balance | $275,994 |
| Home equity (after 6% selling costs) | $178,464 |
| Net cost of buying (incl. opportunity cost of down payment) | $171,779 |
| Buying vs. renting | Buying is $30,510 cheaper |
Over this specific 7-year horizon, with these specific assumptions, buying wins by roughly $30,500. That margin isn't fixed — it comes directly from the assumptions above, and every one of them is a lever worth testing.
Why the Time Horizon Changes Everything
Buying carries real upfront costs — the down payment and closing costs — that renting doesn't. In the early years, those upfront costs and the slow pace of principal paydown on a mortgage mean renting frequently looks cheaper. As the years pass, more of each mortgage payment goes to principal instead of interest, and appreciation compounds on a larger base, gradually shifting the comparison toward buying. There's typically a break-even horizon somewhere in between — run your own numbers at 3, 5, 7, and 10 years to see where yours falls, since it moves meaningfully with price, rent, and rate.
The Assumption Most Comparisons Skip: Opportunity Cost
Worth knowing: A down payment is cash that stops being available to invest elsewhere. If that $76,000 down payment (20% of $380,000) had instead gone into the market at a 6% return, it would be worth meaningfully more after 7 years than it started. A rent-vs-buy comparison that ignores this overstates how much buying saves — the worked example above deliberately includes it, which is why it's a fairer comparison than a simple "mortgage payment vs. rent" check.
The Four Assumptions That Move the Result Most
Favor buying when
- You'll stay well past the local break-even horizon
- Home appreciation in your market runs above rent growth
- Your investment return assumption is modest relative to appreciation
Favor renting when
- You expect to move within a few years
- Local rent growth is slow relative to home prices
- You'd otherwise invest the down payment at a strong return
Because these four levers — appreciation, rent growth, investment return, and time horizon — do most of the work in either direction, a single scenario is never the full story. Test a range on both sides before treating either answer as settled.
Frequently Asked Questions
Is it cheaper to rent or buy in 2026?
It depends on how long you'll stay and your specific numbers — there's no universal answer. In a worked 7-year example ($2,200/mo rent vs. a $380,000 home purchase), buying came out about $30,510 cheaper once appreciation, equity, and opportunity cost were all factored in — but a shorter time horizon or a smaller price gap can flip that result.
How long do I need to stay for buying to beat renting?
There's usually a break-even horizon — buying tends to look worse than renting in the first few years because of closing costs and the slow pace of early equity buildup, then improves the longer you stay as more of each payment goes to principal and the home (hopefully) appreciates. Run your own numbers at multiple time horizons (3, 5, 7, 10 years) to see where your break-even point falls.
Why does opportunity cost matter in the rent vs. buy decision?
Your down payment and closing costs are cash you can't invest elsewhere while it's tied up in the home. A rent-vs-buy comparison that ignores what that cash could have earned in the market overstates how much buying actually saves you — including it gives a more honest, apples-to-apples comparison.
What assumptions matter most in a rent vs. buy comparison?
Home price appreciation, rent growth, your investment return assumption for the money not spent on a down payment, and how long you'll stay are the four biggest levers — small changes to any of them can meaningfully shift the result, which is why it's worth testing a range rather than trusting a single scenario.
Does the rent vs. buy math include selling costs?
It should. Selling a home typically costs 6-8% of its sale price in agent commissions and closing costs, which reduces the equity you actually walk away with — leaving this out of the comparison makes buying look better than it really is.
