Should you buy, or keep renting?
Six numbers. An honest answer — including keep renting. We sell newsletters, not mortgages.
Written by Blake Steen, Head of ContentUpdated Your numbers
9% down · $20,400 + $4,600 closing · $87/mo PMI for ~8 years, 10 months
Your answer
Buying comes out $24,000 ahead over 5 years in the U.S.
Breakeven is 2 years, 9 months; your plan is 5 years. Entry and exit fees on a $230,000 home are $22,000.
This is about 62% of a typical home in the U.S. ($372,000). A like-for-like rent would be closer to $1,214.
5 yr · Buy $60k · Rent $36k · Buy ahead $24k
Where the money went
| Over 5 years | Buying | Renting |
|---|---|---|
| Cash in up front9% down plus 2.0% closing costs. The renter invests this instead of spending it. | −$25,000 | $0 |
| Housing payments over 5 yearsBuying: mortgage, property tax, insurance, maintenance, PMI and HOA. Renting: rent plus renter's insurance. | −$127,344 | −$127,389 |
| InvestmentsWhichever side costs less each month invests the difference at 7%, taxed at 15% on the gain. | $3,840 | $35,877 |
| Net proceeds if you sellHome value after 7.5% selling costs, minus the mortgage balance. | $56,004 | n/a |
| Net worth after 5 years | $59,845 | $35,877 |
Itemising beats the $16,100 standard deduction, so we credit $515 in year one — not 22% of all interest.
How fragile? The answer flips if renting cost fell to $1,639 a month. Below that, renting wins instead.
Assumptions & sources
Change any of these and the answer updates.
- Typical home value
- $371,774Zillow ZHVI, 2026-07-31
- Typical rent
- $1,962 / moZillow ZORI, 2026-07-31
- Property tax
- 0.94%Census ACS 2024 5-year
- Homeowners insurance
- $1,737 / yr in USNAIC HO-3, 2023
- State income tax
- 3.0%2026 rate schedules, used only to fill the SALT cap
U.S. typical (no metro picked)
- Maintenance
- 1.7% of value / yr
- Buying costs
- 2.0%
- Selling costs
- 7.5%
- Mortgage insurance
- 0.5% of the loan / yr, under 20% down
- Investment return
- 7%
- Capital gains
- 15%
- General inflation
- 2.5%
- Renter's insurance
- $18 / mo
- Payment comfort cap
- 28% of gross pay
- Your marginal rate
- 22%
- Standard deduction
- $16,100
- SALT cap
- $40,400, then $10,000 from 2030
The model
These figures are not all from the same date, and we list each one’s vintage above rather than stamping one date across the lot. Every free public source measures the existing owner stock, not a fresh purchase. Capped assessments understate what a new buyer pays in property tax, and insurance trended from 2023 understates today’s premiums. Sourcing these numbers makes them citable, not correct. Swap in real quotes for the place actually in front of you.
One growth rate, for both rents and prices. Over long horizons rents and prices are tethered, so using a higher rent-growth rate than price-growth rate quietly assumes the price-to-rent ratio falls, which flatters buying while looking like a neutral assumption. All 410 metro areas cluster between 3.4% and 5.1% a year since 1990, while any single metro ranges from 1.8% to 8.2% depending only on which year you start counting, so a per-metro forecast would be noise dressed up as insight.
What we deliberately leave out. No risk premium for the fact that a house is a concentrated, borrowed-against, hard-to-sell single asset. The standard academic version of this calculation charges about 2% a year for that, and we don’t. No high-income tax machinery (the SALT phase-out above $505k, the 3.8% investment income tax, capital gains above the $250k/$500k home-sale exclusion). No jumbo rate premium, because the spread is currently within a rounding error of zero. Mortgage insurance is deductible again in 2026 but phases out above roughly $109k of income, so we ignore it.
How this works
Two paths, side by side: buy, or rent and invest what you would have spent. Both start with the same cash (down payment plus closing). Each month, whichever costs less invests the difference. We compare net worth — what you’d walk away with after selling costs, the mortgage, and capital gains tax.
The mortgage interest deduction, done properly
Most calculators credit your marginal rate times all mortgage interest. You only benefit from itemising to the extent it beats the standard deduction ($16,100 single / $32,200 joint in 2026). For most first-time buyers, that means the deduction is worth nothing. We also apply the $750k mortgage-debt cap, the shared SALT bucket, and the drop back to $10,000 in 2030.
The stay-ahead point
Breakeven is the first month buying is ahead and never falls behind again — not the first blip in front. That’s stricter than most tools, and it’s the one we’d want for our own money.
What we leave out
No ~2%/yr risk premium for a concentrated, levered house (tilts slightly toward buying). No outcome range. Local figures describe homes people already own, which understates tax and insurance for a new purchase — full sources are in the assumptions panel.
What the other calculators get wrong
Checked September 2026. Each of these moves the answer toward buying.
- The New York Times
- Tax toggle offers “TCJA expires after 2025” or “renewed in full” — neither is current law. Still the best model in the field.
- NerdWallet
- Assumes every buyer saves by itemising. No standard-deduction test.
- Zillow
- Default is 5% down with no mortgage insurance, and credits the deduction without testing it.
- Calculator.net
- Explains PMI in help text, then charges none of it at 5% down.
- All of them
- None models the 2030 SALT reversion, and none asks how much house your income and savings support.
Published by Invested Inc. Last updated , when the local figures were last refreshed. Who we are · Tell us we got something wrong