Last updated: April 2026
TL;DR: At 7.1 percent mortgage rates, the buy-vs-rent breakeven horizon in high-cost US metros stretches to 8 to 12 years, making renting the financially superior choice for anyone not planning to stay that long. Calculate your local breakeven before committing to a down payment.
A $450,000 home at a 7.1 percent mortgage rate costs you roughly $3,020 per month in principal and interest alone, before property taxes, insurance, HOA fees, or the $8,000 to $15,000 in annual maintenance that most financial planners build into their models. In San Jose, Austin, and Denver, that monthly all-in number clears $4,200 easily. If you can rent the equivalent home for $2,600, the math is not sentimental. It is arithmetic.
The homeownership-as-investment belief is so deeply embedded that most people never run the actual numbers before signing. The National Association of Realtors has a direct financial interest in you believing ownership always wins. It often does. But not in every market and not at every interest rate, and 2026 is a specific environment with specific numbers that do not look like 2012 or 2019.
The breakeven horizon is the number that matters most. It represents how long you need to stay in a home before buying becomes cheaper than renting after factoring in closing costs, selling costs, and opportunity cost on your down payment. At 7.1 percent rates, that breakeven horizon in high-cost metros sits between 8 and 12 years, according to Zillow research published in early 2025. In 2020, at 3 percent rates, it was closer to 3 years. That difference is not trivial.
Your down payment has an opportunity cost that almost nobody calculates. A $90,000 down payment on a $450,000 home, invested instead in a broad index fund returning the historical average of roughly 10 percent annually, grows to $233,000 in 10 years. That is $143,000 in foregone gains, not counting the liquidity you preserve by keeping that capital accessible. Equity in a primary home is illiquid until you sell or borrow against it.
Renting makes quantifiable sense when your all-in ownership cost exceeds your rent-plus-investment-return scenario by more than $500 per month over a 5-year period. It also makes sense when your job, relationship, or city of residence is genuinely uncertain, because selling a home inside 3 years typically costs you 8 to 10 percent of the sale price in transaction fees and closing costs alone.
This is not an argument against buying. Ownership builds equity, offers stability, and in the right market at the right rate remains one of the best forced savings mechanisms available. But the decision deserves a number, not a reflex. Run the breakeven calculation for your specific market before you call a mortgage broker. The answer may surprise you.
Vanderflip Home has a free rent-vs-buy breakeven calculator that shows your specific horizon based on your local market, down payment size, and expected stay.
FREQUENTLY ASKED QUESTIONS
Is renting cheaper than buying right now in 2026?
In most high-cost metros, yes. At a 7.1 percent mortgage rate, the all-in monthly cost of owning a $450,000 home typically runs $1,000 to $1,600 more per month than renting the equivalent property.
How long do you have to stay in a home for buying to make financial sense?
At current rates, Zillow research puts the breakeven horizon at 8 to 12 years in high-cost metros. In lower-cost markets with smaller down payments, it can be closer to 5 to 6 years.
What is the opportunity cost of a down payment?
A $90,000 down payment invested in a broad index fund at the historical average return of roughly 10 percent annually grows to approximately $233,000 over 10 years, representing $143,000 in foregone gains compared to using that money on a home purchase.