With 30-year mortgage rates around 6.5% and median home prices near $400,000, buying a typical home costs roughly $870 a month more than renting in year one. The honest answer to "should I buy?" comes down to two things: how long you'll stay, and what return you could earn by investing the money you'd otherwise tie up in a down payment.
The break-even point is how many years you must stay before buying leaves you wealthier than renting. With the default assumptions and a conservative 4% investment return, the break-even is around year 12. Stay longer and buying wins; sell sooner and renting comes out ahead once you account for transaction costs.
This is a net-worth comparison. On the buying side, we track every cost — mortgage interest, principal, property tax, insurance, maintenance, PMI, plus 2.5% closing costs — and credit you with the equity you'd recover if you sold (home value minus 6% selling costs minus the remaining loan). On the renting side, we assume you invest the down payment and every month's cost difference at your chosen return rate. The winner each year is whoever has the higher net worth.
This is the number most calculators hide. At a 4% return, buying breaks even around year 12. At 5%, it stretches to roughly 17 years. At 6% or higher — close to long-run stock market averages — renting can win for the entire 30 years, because the money you didn't sink into a house compounds faster than the home appreciates. That's why a disciplined renter who invests the difference is not "throwing money away."
Defaults reflect 2026 U.S. national averages: 6.5% mortgage rate, 20% down, 1.1% property tax, 0.5% homeowner's insurance, 1% annual maintenance, 3% home appreciation, 3% rent inflation, and a 4% investment return. Adjust any input to match your situation — property tax alone ranges from under 0.5% in Hawaii to over 2% in New Jersey.
With a $400,000 home at a 6.5% mortgage rate, 20% down, and a conservative 4% investment return, the break-even point is around year 12 — where a buyer's home equity overtakes the wealth a renter builds by investing the down payment and monthly savings. Stay longer than 12 years and buying usually wins; sell sooner and renting typically comes out ahead after transaction costs. The exact year is highly sensitive to the investment return you assume.
At 6.5% mortgage rates, buying a $400,000 home costs roughly $870 per month more than renting a comparable place in the first year, once you include mortgage principal and interest, property tax, insurance, and maintenance. This gap narrows over time because the mortgage payment stays fixed while rent rises about 3% per year.
The assumed investment return is the single biggest factor most calculators hide. At a 4% return, buying breaks even around year 12. At 5%, it stretches to roughly 17 years. At 6% or higher — close to long-run stock market averages — renting can win for the entire 30 years, because money not tied up in a down payment compounds faster than the home appreciates.
This calculator uses a net-worth comparison. On the buying side it counts mortgage interest, principal, property tax, insurance, maintenance, PMI, and 2.5% closing costs, then credits the equity recovered at sale (home value minus 6% selling costs minus remaining loan balance). On the renting side it assumes the down payment and every month's cost difference are invested at the chosen return rate. The break-even year is when the buyer's equity first exceeds the renter's investment portfolio.
It depends on how long you plan to stay and what you assume about investment returns. At 6.5% mortgage rates, buying a $400,000 home costs about $870/month more than renting in year one. If a renter invests that difference plus the down payment at 4% returns, buying doesn't become the smarter financial choice until around year 12. At 6%+ investment returns, renting wins financially for the entire 30-year period. Buying tends to be smarter if you plan to stay 10+ years and value stability. Renting is smarter if you may move within 5–7 years, have high investment returns, or value liquidity.
Waiting for rates to drop sounds appealing, but the math is tricky. If rates fall from 6.5% to 5.5% on a $400,000 home, your monthly payment drops about $240. But if home prices rise 5% while you wait, the purchase price increases by $20,000 — which adds roughly $115/month back. You also lose months of equity building. The better question is: how long do you plan to stay? If 7+ years, buying now at current rates likely makes sense. If fewer than 5 years, waiting or continuing to rent and investing the difference may be smarter regardless of where rates go.