The rulebook · Form RB-12
Should I Rent or Buy a Home? Form RB-12
There is no universal answer — only an answer for your horizon. This page works the question through once, properly, on a $450,000 home against $2,200 a month rent: the true monthly owning cost, the running totals, and the year the math flips.
1Count the whole owning cost
The payment on a $450,000 home with 20% down at 6.5% over 30 years is $2,275 a month. The owning cost — payment plus 1.1% property tax, 0.35% insurance, 1% maintenance, and no HOA — is about $3,196 a month. Against $2,200 of rent, you are not choosing between $2,200 and $2,275. You are choosing between $2,200 and $3,196, plus $103,500 of cash (down payment + 3% closing) tied up on day one.
2Race the running totals
Each year, two totals are posted: the net cost of buying (down + closing + everything paid to own + 8% selling costs, minus the equity you’d recover) against the rent paid, with nothing recovered. Early on, buying trails badly — the $103,500 upfront is a hole to climb out of. But the renter’s total grows every year while the buyer builds equity, and at year 7 the lines cross.
- True owning cost (mo. 1)$3,196
- Rent (mo. 1)$2,200
- Cost to buy, after 3 years$114,758
- Cost to rent, after 3 years$81,600
- Cost to buy, after 7 years$196,813
- Cost to rent, after 7 years$202,289
- Verdict at 7 yearsBuying ahead by $5,476
Sell in year 3 and the same numbers hand renting a $33,158 win. The answer was never about rent vs the payment; it was always about how long you stay. Run your own horizon on the full slip.
Common questions Form RB-12
Should I rent or buy a home in 2026?
Run your own horizon, but the typical answer: renting wins for short stays (under ~5 years), buying wins for long stays. On a $450,000 home against $2,200 rent with typical assumptions, break-even lands in year 7 — buying is ahead by $5,476 after 7 years. The 3% buying and 8% selling transaction costs are why short stays lose.
Is it cheaper to rent or buy right now?
At today’s rates, cheap rent ($1,500 against a $450,000 home) can keep renting ahead for 16 years, while expensive rent ($3,500) flips the verdict in year 3. The rent-to-price ratio matters more than the rate.
What does the break-even year assume?
3% yearly rent increases, 3% home appreciation, 1.1% property tax, 0.35% insurance, 1% maintenance, 3% closing and 8% selling costs. Change any of them on the calculator and the break-even moves.
Is this financial advice?
No — it is unrecovered-cost arithmetic on a worked example. It also doesn’t credit the renter with investing the down payment, which can flatter buying slightly.