Renting vs. Buying: How to Run the Real Cost Breakdown for Your Situation
The math only works if you use dated, like-for-like numbers on both sides — here are the U.S. figures, the inputs behind them, and where your metro differs.
By Desmond Achebe-Park · Oct 06, 2026 · 9 min read
At the national median, buying costs more per month than renting right now: about $2,670 a month in principal, interest and property tax on a median-priced existing home, against a typical asking rent of $1,962. That gap of roughly $708 a month comes from a 7.28% 30-year fixed rate (Freddie Mac, 2026-10-01), a $429,100 median existing-home sale price (National Association of REALTORS, 2026-08) and a 0.9% average effective property tax rate (ATTOM, 2025).
Those are national figures, and no one buys or rents a national house. Use the structure below — the inputs, the arithmetic, the break-even — and swap in your own metro's price, rent and tax rate. A licensed agent, lender or tax professional should check the version you act on.
Side-by-Side Market Data
Both columns use the most recent figure I have from a named source, with the date attached. The dates are not identical — rent is July 2026, the sale price August 2026, the mortgage rate October 1, 2026, the tax rate full-year 2025 — so treat this as the closest available like-for-like, not a single-day snapshot. Rebuild it with your own metro's numbers before you decide anything.
| Line item | Renting (U.S. typical) | Buying (U.S. median existing home) |
|---|---|---|
| Price | $1,962 typical asking rent, up 2.3% annually (Zillow Observed Rent Index, 2026-07) | $429,100 median existing-home sale price, up 1.6% year over year (National Association of REALTORS, 2026-08) |
| Price per square foot | Not published in the ZORI release cited here | Not published in the NAR release cited here; nearest dated per-square-foot data is neighborhood-level from Redfin, 2026-08: $293 in Heart of Chicago, $1,480 in the Marina District, San Francisco |
| Property tax rate | Not billed to you directly; the owner's tax sits inside the rent | 0.9% average effective rate on single-family homes (ATTOM, 2025); ATTOM's average 2025 bill was $4,427 on an average estimated value of $494,231 |
| Typical monthly payment | $1,962 (rent only; renters insurance and utilities not in these sources) | $2,670 = $2,348 principal and interest + $322 property tax |
| Loan inputs used | None | $429,100 price, 20% down ($85,820), $343,280 loan, 30-year fixed at 7.28% (Freddie Mac, 2026-10-01) |
| Upfront cash | Deposit and any move-in fees — not covered by the sources cited here | $85,820 down payment at 20%, plus closing costs not covered by the sources cited here |
| Market conditions | 39.8% of rentals offered a concession (Zillow, 2026-07) | 1.62 million homes for sale, 4.9 months of supply, sales at a 3.98 million annual rate (NAR, 2026-08) |
Two notes on consistency. The $429,100 August figure is down from the $434,100 median NAR reported for July 2026 (NAR, 2026-08-11); I use $429,100 everywhere below. Rent has moved very little across 2026 in the same index: $1,895 in February (Zillow, 2026-02), $1,965 in June (Zillow, 2026-06) and $1,962 in July (Zillow, 2026-07).
The buy column excludes homeowners insurance, HOA dues, mortgage insurance and maintenance, because I have no sourced figure for them. All four are real and all four push the buy side up — condo and HOA buyers especially should add their own quoted dues before comparing.
Cost of Living and Affordability Comparison
Here is the arithmetic behind the $2,670, step by step, so you can swap your own numbers in.
- Price: $429,100 (NAR, 2026-08). Down payment at 20%: $85,820. Loan amount: $343,280.
- Rate and term: 7.28% fixed, 30 years (Freddie Mac, 2026-10-01). Monthly rate 0.6067%, 360 payments.
- Principal and interest: $2,348 a month.
- Property tax at the 0.9% average effective rate (ATTOM, 2025): $429,100 × 0.009 = $3,862 a year, or $322 a month.
- Monthly buy total used here: $2,348 + $322 = $2,670 (no insurance, HOA or maintenance).
- Rent: $1,962 (Zillow, 2026-07). Monthly difference: $2,670 − $1,962 = $708.
Five-year totals. Rent is not flat, so grow it at the 2.3% annual pace Zillow reported for July 2026 — an assumption carried forward, not a forecast: $23,544 in year one, then $24,086, $24,640, $25,206 and $25,786. Five-year rent: $123,262.
Buying over the same 60 months: $2,670 × 60 = $160,200 paid out. Of that, about $19,200 goes to loan principal (the rest is roughly $121,700 of interest and $19,320 of property tax). So the non-equity cash cost of owning is $160,200 − $19,200 = $141,000.
Compare like with like: $141,000 of owner cash burned vs. $123,262 of rent. Buying costs about $17,700 more over five years, or $295 a month — on top of $85,820 locked up in the down payment, which earns nothing while it sits in the house.
Rate sensitivity. Hold the price and loan constant and move only the rate. At 6.38% (Freddie Mac, 2026-03-26), principal and interest on the same $343,280 loan is $2,143 instead of $2,348 — $205 a month, about $2,460 a year, $12,300 over five years.
Tax sensitivity. The 0.9% rate is a national average. Illinois led all states at 1.84% in 2025 (ATTOM, 2025). On the same $429,100 price that is $7,896 a year, or $658 a month — $336 a month above the $322 used in the table, which alone moves the buy-vs-rent gap from $708 to $1,044.
Concession sensitivity. Zillow reported 39.8% of rentals offering a concession in July 2026. If a concession is one free month on a 12-month lease, that is one-twelfth off: $1,962 becomes an effective $1,799, and the monthly gap widens from $708 to $871. Zillow's release does not state the size of those concessions, so check what is actually on offer in your buildings.
Bottom Line: Which Option Fits Your Situation
The break-even question is not "is rent cheaper this month." It is whether the equity you build, plus whatever the home sells for, covers the extra cash you spend and the cost of selling. Two readers, same national inputs, different answers.
You expect to move within two or three years. Over 24 months at these inputs, you pay $64,080 ($2,670 × 24) and build about $6,800 in principal — a non-equity cost of about $57,200. Renting the same period at the 2.3% growth assumption costs $47,629. Buying is about $9,600 worse on cash, before closing costs going in and agent and transfer costs going out, neither of which are in the sources cited here. The data favors renting unless your local resale market hands you enough gain to cover all of that, and no one can promise it will. With 4.9 months of supply nationally (NAR, 2026-08), you are not buying into a market that clears instantly either.
You expect to stay seven years or more and your income is steady. Over 84 months you pay $224,280 and build about $29,000 in principal, a non-equity cost of roughly $195,300. Rent over the same stretch, growing at 2.3%, totals about $176,600. Buying is still about $18,600 more in cash — but the monthly penalty narrows as the loan amortizes: about $400 a month at two years, $295 at five, $222 at seven. The longer you stay, the smaller the shortfall and the more a 30-year fixed payment fixes your housing cost while rent keeps compounding. On these national numbers the long-stay case is close, and it tips on three things the national data cannot tell you: your metro's price direction, your actual tax rate, and your insurance and HOA bill.
How much the local part matters: Redfin reported Heart of Chicago down 27.0% year over year at a $373,000 median over the three months to August 2026, while the Marina District in San Francisco was up 49.9% at a $3.5 million median in the same period. Two neighborhoods, two opposite stories, one national median of $429,100. Run the table above with your own submarket's figures, and have an agent, lender and tax professional check the inputs before you sign anything.
Frequently asked questions
Does the $708 monthly gap mean renting is cheaper where I live?
Only if your market looks like the national median. The $708 comes from $2,670 (principal, interest and 0.9% tax on a $429,100 median price) minus $1,962 rent (NAR 2026-08; ATTOM 2025; Zillow 2026-07). Redfin's August 2026 neighborhood data shows how far local prices stray: $373,000 median in Heart of Chicago at $293 per square foot, $3.5 million in San Francisco's Marina District at $1,480 per square foot. Replace the price, rent and tax rate with yours and redo steps 1 to 6.
Should I wait for mortgage rates to fall before buying?
Price the difference rather than guessing. On the same $343,280 loan, 6.38% (Freddie Mac, 2026-03-26) costs $2,143 a month and 7.28% (Freddie Mac, 2026-10-01) costs $2,348 — $205 a month apart. Rates moved 0.25 points in a single week in that October report (7.03% to 7.28%), so they move both ways, and a lower rate can be offset if prices in your submarket move against you. No one can tell you which rate you will be approved for.
What if I put down 5% instead of 20%?
The loan rises from $343,280 to $407,645 on the same $429,100 price. At 7.28% that is about $2,789 in principal and interest, plus the same $322 of property tax at 0.9% — roughly $3,111 a month, or $1,149 above the $1,962 rent, before any mortgage insurance, which is not in the sources cited here. Upfront cash drops from $85,820 to $21,455. Lower entry cost, higher monthly cost and slower early equity; FHA, VA and conventional low-down options each price this differently.
How much can property taxes change the answer?
A lot. The table uses the 0.9% average effective rate (ATTOM, 2025), which is $322 a month on $429,100. Illinois averaged 1.84% in 2025, New Jersey 1.58%, Vermont 1.40%, Connecticut 1.36% and Ohio 1.32% (ATTOM, 2025). At 1.84% the same price carries $658 a month in tax — $336 more — which widens the monthly gap from $708 to $1,044. Pull the actual assessed value and millage for the specific parcel, not the state average.
Do rent concessions change the comparison?
They change the rent side. Zillow reported 39.8% of rentals offering a concession in July 2026, up from 35.2% a year earlier in the June 2026 release. If a concession equals one free month on a 12-month lease, the $1,962 asking rent works out to about $1,799 a month in year one, widening the gap against the $2,670 buy figure from $708 to $871. Zillow does not publish the size of those concessions, so verify what is actually offered.
Sources
- Freddie Mac — Mortgage Rates Average 7.28% (2026-10-01)
- Freddie Mac — Mortgage Rates Average 6.38% (2026-03-26)
- National Association of REALTORSa — NAR Existing-Home Sales Report Shows 1.7% Decrease in July (2026-08-11)
- National Association of REALTORSa — Existing-Home Sales Housing Snapshot (2026-08)
- Zillow Research — Rents Reach $1,962, Rising at the Fastest Pace in Over a Year (July Rent Report) (2026-07)
- Zillow Research — Rent Went Up But So Did the Freebies (June Rent Report) (2026-06)
- Zillow Research — An Expanding Supply of Rentals Keeps Rent Growth in Check (February Rental Report) (2026-02)
- ATTOM — Top 10 U.S. Counties with Highest Effective Property Tax Rates in 2025 (2025)
- ATTOM — Average Single-Family Home Property Tax Bill Rose 3 Percent in 2025 (2025)
- Redfin — 2026 Marina District, San Francisco Housing Market: House Prices & Trends as of August (2026-08)
- Redfin — 2026 Heart of Chicago, Chicago Housing Market: House Prices & Trends as of August (2026-08)
Written by
Desmond Achebe-Park
Desmond covers the renter's side of the market, from lease fine print to the etiquette of negotiating with landlords. He's interested in how small cities absorb people priced out of bigger ones. He writes with a skeptic's eye toward anything called a 'luxury amenity.'
