Renting vs Buying: How to Decide in 2026

Introduction

The renting versus buying question is usually argued as though one answer is correct in general. It is not. The right answer depends on how long you stay, what housing costs in the city you are moving to, and how much of your savings you are willing to keep illiquid.

In 2026 the calculation is more sensitive than it has been in recent years, because mortgage rates, home prices, and rents have not moved together. Treating the decision as a comparison of monthly payments alone produces the wrong answer often enough to be expensive.

Start With the Full Cost of Ownership

The mortgage payment is not the cost of owning a home. It is one line among several:

• Principal and interest — the amount the lender actually calculates
• Property taxes — assessed locally and often reassessed after a sale
• Homeowners insurance — typically required by the lender
• HOA or strata fees — common in condos and newer developments
• Maintenance and repairs — a conventional planning figure is 1% of the home’s value per year, though older properties may need more
• Opportunity cost — the return you would have earned on the down payment if invested instead

Taken together, these commonly add between 25% and 40% on top of the mortgage payment itself. Comparing a mortgage against rent without them compares two numbers that do not describe the same thing.

Our home ownership calculator models the down payment, interest rate, and term together so you can see the monthly figure before committing.

What Renting Actually Costs

Renting has its own non-obvious costs, and they are worth naming rather than dismissing:

• No equity accumulation — every payment ends with the landlord
• Exposure to renewal increases — the largest variable in a multi-year budget
• Fewer tax deductions — mortgage interest and property tax deductions generally do not apply to renters
• Less control — renovation, pets, and lease duration are negotiated rather than owned

Renting’s genuine advantage is optionality. If you may leave in two or three years, a purchase has to clear closing costs on both ends before it can win.

The Break-Even Question

The decision usually turns on how long you expect to stay. A simplified version of the break-even logic looks like this:

break-even months = total closing costs on both sides / (monthly owning cost - monthly renting cost)

If buying costs $600 more per month after all recurring items, and total transaction costs come to roughly $18,000 when both the purchase and the eventual sale are counted, the positions converge at around 30 months. Stay beyond that and buying typically pulls ahead; leave sooner and renting usually does.

The formula is intentionally rough. It ignores appreciation, the tax treatment of capital gains, and the possibility that rents rise faster than ownership costs — all of which can shift the result meaningfully in either direction.

The Four Inputs Worth Getting Right

1. Expected time in the city. This is the single largest lever, and most people estimate it optimistically.
2. Local price-to-rent ratio. Where rents are high relative to purchase prices, buying tends to reach break-even sooner.
3. Your down payment size. A larger down payment lowers the monthly cost but increases the opportunity cost.
4. Tax position. Deductions depend on jurisdiction and personal circumstances, so confirm current rules rather than relying on last year’s treatment.

Conclusion

Renting wins on flexibility and on short horizons; buying wins on equity and on long horizons, when the recurring costs have been counted honestly. Work the break-even arithmetic with your own numbers, treat the maintenance and opportunity costs as real, and revisit the comparison if your plans change.

Last updated: October 19, 2026