When Does Buying Beat Renting? The Break-Even, Explained

Last reviewed September 28, 2026

The honest answer: buying beats renting when you stay long enough for the things that make owning expensive up front — closing costs, the interest-heavy first years, and selling costs on exit — to be outweighed by what you keep. With today's cited defaults, that crossover lands around year 6 of a 7-year stay for a typical $450K home with 20% down. But the number moves a lot with three inputs you control: how long you stay, the mortgage rate you lock in, and how much the home appreciates.

That is the shape of the answer, and this page shows the shape with the calculator's own numbers — sourced, not asserted.

What actually moves the break-even

Four variables do most of the work. Each is a slider in the calculator with a cited default.

How long you stay — the biggest lever

The first years of a mortgage are mostly interest. On a $360,000 loan at 7.03%, roughly $25,192 of the first year's $28,828 in principal-and-interest goes to interest — about 87%. Paying down principal slowly means your equity (and your net proceeds at sale) builds slowly at first. Buying carries two one-time costs the renter never sees: purchase closing costs (~2.5% of price, charged in year 1) and selling costs (~6% of the sale price, charged at exit). Those are fixed hurdles, so the longer you stay, the more years there are to spread them out. This is why a 2-year stay usually favors renting and a 10-year one usually favors buying — and why the stay-duration slider is the one the UI calls out as “the single biggest driver.”

The mortgage rate

The rate sets the monthly P&I and the pace of principal paydown. Higher rates mean more interest early, a slower build toward break-even, and a higher monthly owning cost. The calculator defaults to the current national average — 7.03% for a 30-year fixed, from the Freddie Mac PMMS survey of September 24, 2026 — and lets you type your actual quoted rate in its place.

Appreciation

The home's value growth is what makes your equity grow beyond what you paid in. The calculator defaults to 3.8%/yr, the FHFA House Price Index's long-run 30-year average, and restates the caveat in the UI: past appreciation does not predict future prices. Appreciation is inside the net-sale-proceeds figure — the model never credits it a second time.

Closing costs and taxes

Purchase closing costs (~2.5%) are charged up front; selling costs (~6% — commission plus transfer fees) are charged at exit. Property tax (default 1.1% of value), insurance (0.6%), and maintenance (1.0%) are annual carrying costs, and the tax model only credits the mortgage-interest deduction when itemizing beats the $32,200 standard deduction (2026, married filing jointly), with the 2026 SALT cap at $40,400. At these defaults itemizing no longer clears the higher standard deduction, which is exactly why the break-even moved from year 5 to year 6 when the 2026 figures landed.

Already own and weighing a sale this year instead? What you'd net if you sold instead — the flagship calculator prices today's proceeds against holding N more years, with Section 121 and your state's tax-reset rule.

Worked example: $450K home, 20% down, 7-year stay

These are the calculator's exact default numbers, walked through year by year.

Home price $450,000; down payment 20% = $90,000; loan $360,000
Rate 7.03% (PMMS default) → P&I $2,402/month
Buying closing costs 2.5% = $11,250 (year 1)
Appreciation 3.8%/yr; rent starts $2,200/mo growing 3%/yr
Tax 1.1% · insurance 0.6% · maintenance 1.0% of value

The model counts every dollar of cash in — down payment, purchase closing, and annual carrying costs — and subtracts what you'd walk away with at sale (sale price minus ~6% selling costs, minus the loan payoff). Rent is simply total rent paid.

Year	Net cost of owning	Total rent paid
1	~$59,500	$26,400
2	~$80,400	$53,600
3	~$100,800	$81,600
4	~$120,700	$110,400
5	~$140,200	$140,200
6	~$159,100	$170,800
7	~$177,500	$202,300

The break-even lands in year 6 (highlighted row). By year 5 owning's net cost (~$140,200) sits right at total rent paid (~$140,200) — a photo finish — and from year 6 on the owning line stays under the rent line. Over the full 7-year stay, owning costs about $177,500 net versus $202,300 in rent — roughly $2,100/month equivalent for owning against rent that has grown to $2,627/month in the final year. Year-1 monthly cost of owning is about $3,400 (pre-equity, with the closing costs front-loaded), which is why the first years look bad for buying.

The verdict the calculator itself would state: over 7 years, buying comes out ahead — the break-even is before the end of the stay.

What the model leaves out

The calculator is deliberately honest about its blind spots, and this page repeats them so they are not buried:

Maintenance surprises. The model assumes maintenance at a flat 1% of value per year. A roof, HVAC failure, or foundation issue is lumpy and can hit years before you sell — real maintenance is not a smooth 1%.
Transaction costs on exit. Selling costs (~6%) are modeled, but the model assumes you sell at the end of the stay. If you hold, refinance, or rent the property out instead, the exit math changes — and so does the break-even.
Liquidity. The down payment and closing costs are cash locked into the home until you sell. The model does not credit what that money could have earned invested elsewhere — the UI states this exclusion explicitly. For someone who needs that cash liquid, the comparison looks different.
Tax changes, rent reality, and local variation. The deduction model uses 2026 figures; rent growth, tax rates, and appreciation are assumptions you can (and should) override with your own numbers.

The right way to use this: treat the defaults as a starting point, change the sliders to match your actual rate, your likely stay, and your local rent and tax figures — then read the crossover. The model shows the shape; your inputs set the answer.

Open the rent-vs-buy calculator →

Change any assumption and watch the break-even move.

Sources

This is an estimate, not tax or investment advice. Figures were verified against the calculator's own math on 2026-09-25.