Rent vs Buy 2027: Break-Even Calculator and When to Buy
For the first time since 2022, the median mortgage payment ($2,095) is below the median rent ($2,100). Rents dropped 1.5% in 2025 and 1.2% in 2026, but the rent advantage is fading. With home prices flat, mortgage rates stabilizing at 6.3%, and incomes rising, 2027 may be the tipping point where buying clearly wins over renting in most US markets. Here is the complete break-even analysis.
Should You Buy or Keep Renting?
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Compare Lenders and Get Pre-ApprovedThe National Picture: Rent vs Buy 2027
| Metric | Renting | Buying | Winner |
|---|---|---|---|
| Monthly Payment | $2,100 | $2,095 | Buy (by $5) |
| Equity Buildup | $0 | ~$500/month | Buy |
| Tax Deductions | None | MID + property tax | Buy |
| Maintenance | $0 (landlord pays) | $300-$800/month | Rent |
| Upfront Cost | $2,100-$4,200 (deposit) | $12,000-$22,000 | Rent |
| Flexibility | High (break lease) | Low (must sell) | Rent |
| 5-Year Net Cost | $126,000 | $96,000 (after equity) | Buy (saves $30K) |
| Appreciation | $0 | ~$4,150/year (1%) | Buy |
Based on median US home price ($415K) with 10% down at 6.3% 30-year fixed, vs median US rent ($2,100/month). 5-year net cost includes equity buildup, tax benefits, maintenance, and closing costs for buying. Individual results vary significantly by market.
Buying saves ~$30,000 over 5 years vs renting — if you can afford the down payment
Find Down Payment Assistance ProgramsThe Break-Even Calculator: How It Works
The break-even point is when the total cost of buying (down payment + closing costs + monthly ownership costs) equals the total cost of renting (monthly rent + renter's insurance). After the break-even point, buying becomes cheaper every month.
Break-Even Formula
Break-Even (months) = (Down Payment + Closing Costs) / (Monthly Rent - Monthly Ownership Cost After Equity)
Example:
Down payment (3.5% FHA): $14,525
Closing costs: $4,000
Total upfront: $18,525
Monthly rent: $2,100
Monthly ownership (P&I $2,095 + tax/ins $500 - equity $500 = $2,095 net)
Monthly savings from buying: $2,100 - $2,095 = $5 + $500 equity = $505
Break-even = $18,525 / $505 = 37 months (just over 3 years)
Calculate Your AffordabilityCity-by-City: Where Buying Wins in 2027
| City | Median Home | Mortgage Pmt | Median Rent | Break-Even | Winner |
|---|---|---|---|---|---|
| Pittsburgh, PA | $240K | $1,210 | $1,650 | 14 months | Buy |
| Cleveland, OH | $220K | $1,109 | $1,500 | 15 months | Buy |
| Indianapolis, IN | $275K | $1,386 | $1,600 | 22 months | Buy |
| Chicago, IL | $365K | $1,841 | $2,100 | 28 months | Buy |
| Charlotte, NC | $385K | $1,942 | $1,950 | 36 months | Buy |
| Atlanta, GA | $395K | $1,992 | $2,050 | 38 months | Buy |
| Dallas, TX | $420K | $2,118 | $2,050 | 48 months | Tie |
| Phoenix, AZ | $440K | $2,219 | $2,100 | 52 months | Tie |
| Austin, TX | $525K | $2,647 | $2,200 | 72+ months | Rent |
| San Diego, CA | $850K | $4,285 | $3,200 | 10+ years | Rent |
| San Francisco, CA | $1.3M | $6,555 | $4,500 | 15+ years | Rent |
| New York, NY | $800K | $4,033 | $3,500 | 8+ years | Rent |
Mortgage payment based on 10% down, 6.3% 30-year fixed, P&I only. Break-even includes 10% down + $4,000 closing costs divided by monthly savings (rent - mortgage + equity). In high-cost markets, renting wins unless you stay 8+ years.
In affordable markets (Pittsburgh, Cleveland, Indy), buying wins in under 2 years
Get Pre-Approved for Your MarketThe True Cost of Ownership: Beyond the Mortgage
Many renters underestimate the hidden costs of homeownership. Your mortgage payment is just the beginning. Here is what owning really costs per month:
| Cost Category | Monthly Amount | Annual Amount | Who Pays If Renting |
|---|---|---|---|
| Mortgage P&I ($415K, 10% down, 6.3%) | $2,095 | $25,140 | N/A (rent instead) |
| Property Taxes (1.1% avg) | $380 | $4,565 | Landlord |
| Homeowners Insurance | $150 | $1,800 | Landlord |
| PMI (if < 20% down) | $200 | $2,400 | N/A |
| Maintenance (1% of value) | $346 | $4,150 | Landlord |
| HOA (if applicable) | $200 | $2,400 | Landlord |
| Utilities (varies) | $250 | $3,000 | Tenant (usually) |
| Total Monthly Cost | $3,621 | $43,455 | — |
| Less: Equity Buildup | -$500 | -$6,000 | — |
| Less: Tax Savings (MID) | -$200 | -$2,400 | — |
| Net Monthly Cost | $2,921 | $35,055 | — |
Based on $415K median home, 10% down, 6.3% rate. Property taxes vary by state (0.28% in HI to 2.49% in NJ). Maintenance 1% of home value per year is a standard estimate. PMI drops off once you reach 78% LTV. Tax savings assume 24% bracket itemizing deductions.
When Renting Is Smarter
- You plan to move within 3 years: Transaction costs (closing costs + selling costs = 6-10% of home value) exceed any equity buildup. Calculate your affordability first
- You live in a high-cost market: In San Francisco, NYC, and San Diego, the break-even exceeds 8-15 years. Renting and investing the difference often wins.
- You value flexibility: If your career may require relocation, or you are unsure about your long-term plans, renting gives you freedom to move.
- You cannot afford the down payment: Without DPA, you need $12,000-$22,000 upfront. If you do not have it, keep renting and saving. Check if you qualify for down payment assistance
- Your credit score is below 620: You will not qualify for good rates. Spend time improving your credit first. Find first-time buyer programs that accept lower scores
- You have high debt: If your DTI exceeds 43%, you will not qualify for a mortgage. Pay down debt first.
When Buying Is Smarter
- You plan to stay 4+ years: Break-even in most affordable markets is 2-3 years. After that, you save money every month. Get pre-approved to start the process
- You live in an affordable market: Pittsburgh, Cleveland, Indianapolis, Chicago — buying wins in under 3 years.
- You have stable income: A steady job with 2+ years of history makes qualifying easy. Compare lenders for your situation
- You want to build wealth: Every mortgage payment builds equity. Over 30 years, a $415K home at 1% appreciation is worth $560K — plus you have $415K in equity from paydown.
- You qualify for DPA: Many state programs offer $10K-$25K in grants. This can reduce your upfront cost to near $0. Find DPA programs in your state
- You want stability: No landlord can raise your rent or sell the property from under you. Your payment is fixed for 30 years.
- You want tax benefits: Mortgage interest deduction + property tax deduction can save $2,000-$4,000/year on taxes.
The "Rent and Invest" Strategy: Does It Work?
A common argument for renting: "Rent and invest the difference in the stock market." Let's compare:
10-Year Comparison: Buy vs Rent + Invest
Buying: $415K home, 10% down ($41.5K), 6.3% rate
- Monthly net cost: $2,921 (after equity + tax savings)
- Home value after 10 years (1% growth): $458K
- Equity from paydown: ~$65K
- Total equity after 10 years: $108K + $43K appreciation = $151K
Renting + Investing: $2,100/month rent
- Monthly cost: $2,100 + $30 insurance = $2,130
- Monthly savings vs buying: $2,921 - $2,130 = $791 invested
- Investment after 10 years at 7% return: $137K
- Plus original down payment invested: $41.5K at 7% = $82K
- Total investment value: $137K + $82K = $219K
Winner: Rent + Invest by $68K over 10 years — BUT only if you actually invest the difference. Most renters spend it instead.
The "rent and invest" strategy mathematically wins in many markets — but only if you have the discipline to invest the full difference every month. Studies show that most renters do not invest the difference; they spend it on lifestyle. Homeowners are "forced savers" — the mortgage payment builds equity whether they want to or not. Compare lenders to see your ownership costs.
Frequently Asked Questions
Is it better to rent or buy in 2027?
In most US markets, buying is now cheaper. The median mortgage ($2,095) is below median rent ($2,100), and buyers build ~$500/month in equity. Over 5 years, buying saves ~$30K. However, buying requires a down payment and closing costs. If you stay less than 3 years, rent. Compare lenders to see your options.
How do I calculate rent vs buy break-even?
Break-even = (Down Payment + Closing Costs) / (Monthly Rent - Monthly Ownership Cost After Equity). Example: $18,500 upfront / $505 monthly savings = 37 months. If you plan to stay longer than 37 months, buying wins. Calculate your affordability.
What are the hidden costs of buying a home?
Property taxes ($380/month), insurance ($150), PMI ($200 if < 20% down), maintenance ($346), HOA ($200 if applicable). Total hidden costs: $500-$1,500/month beyond the mortgage. Renters do not pay these — the landlord does. Get pre-approved to see your true costs.
Will rents go down in 2027?
Rents dropped 1.5% in 2025 and 1.2% in 2026. For 2027, rents are expected to flatten (0% to +1%). The rent advantage is fading. In high-demand markets, rents may still rise 2-3%. Nationally, buying is becoming more competitive with renting. Find DPA to make buying affordable.
How much down payment do I need?
FHA: 3.5% ($14K on $400K). Conventional: 3% ($12K). VA/USDA: 0%. With DPA grants, many first-time buyers get $10K-$25K, reducing out-of-pocket to near $0. Closing costs add $3K-$8K. Find down payment assistance programs.
Is renting and investing the difference better than buying?
Mathematically, renting + investing can win by ~$68K over 10 years in some markets — but only if you actually invest the full difference every month. Studies show most renters spend the difference instead. Homeowners are "forced savers" through mortgage paydown. Find first-time buyer programs.
Related Guides
Housing Market 2027 Predictions
Buyer's or seller's market? Inventory and price forecasts.
First-Time Homebuyer Grants 2026: Free Money
State programs, DPA grants, and $0-down options.
Mortgage Affordability 2027: Income Needed
How much income you need to buy in each state.
Home Prices 2027 Forecast: Will They Drop?
Regional price forecasts and crash analysis.
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