The Decision Facing Millions of American Renters
With 30-year fixed mortgage rates hovering between 6% and 7% and median US home prices elevated, buying a home is no longer an automatic financial win compared to renting and investing the difference.
The Price-to-Rent Ratio Rule
To evaluate your local real estate market, divide the purchase price of a home by the total annual rent for a comparable property.
💡 Formula: Price-to-Rent Ratio = Home Price ÷ (Monthly Rent × 12)
• Below 15: Buying is generally cheaper long term.
• Above 20: Renting & investing the monthly savings is mathematically superior.
• Below 15: Buying is generally cheaper long term.
• Above 20: Renting & investing the monthly savings is mathematically superior.
When Buying Makes Sense
- You plan to stay in the home for 5 to 7+ years to amortize closing costs.
- You have a 20% down payment to eliminate PMI fees.
- Your housing payment fits comfortably under 28% of gross monthly income.
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