Rent or buy? Choosing if, when and where to buy a home are among the biggest financial decisions most people make in a lifetime. While homeownership is a traditional way many families grow and pass on wealth, huge post-pandemic price increases in markets across the country have Americans questioning whether buying is the right path for them.
New research from Zillow finds that these complicated questions have equally nuanced answers. Although homeowners often come out financially ahead compared to renters, the universal assumption that buying is better isn’t true everywhere — particularly in the most expensive housing markets.
Zillow based its analysis on April 2026 data, using a typical single-family home value of $368,720 and typical monthly rent of about $1,951 a month. The analysis assumes the buyer takes out a 30-year fixed rate mortgage at a rate of roughly 6.2%.
Nationwide, the “breakeven point” at which owning is financially advantageous to renting is roughly six years. That might seem like a long time, but it’s down from an October 2023 peak of 8.4 years.
But across the country, there are significant variations in the figures. Among the 50 largest metropolitan areas analyzed by Zillow, the place where buyers get the fastest payoff is Columbus, Ohio, where it takes just over four years to reach the breakeven point.
Locations where buyers with 20% down payments break even versus renters in less than five years include:
- Columbus, Ohio: 4.1 years
- Memphis, Tennessee: 4.2 years
- Buffalo, New York: 4.2 years
- Indianapolis, Indiana: 4.3 years
- Cincinnati, Ohio: 4.6 years
- Louisville, Kentucky: 4.8 years
On the other hand, there are a trio of cities where homeowners will never come out ahead, even over the full 30-year time horizon of a typical mortgage, and another handful where it takes more than 15 years to reach a breakeven point. (Of course, this assumes that present housing market conditions remain consistent over the decades, which is no guarantee.)
Here are the cities where renters come out ahead:
- San Francisco: no breakeven point after 30 years
- New Orleans: no breakeven point after 30 years
- San Jose, California: no breakeven point after 30 years
- Seattle: 19.7 years
- Los Angeles: 17.1 years
- San Diego, California: 23.3 years
- Austin, Texas: 18.4 years
- Portland, Oregon: 16.7 years
How to calculate costs of renting vs. owning
Zillow’s researchers note that the rent-versus-own math isn’t as simple as comparing the monthly payment. Buyers face higher upfront costs in the form of closing costs and down payments compared to renters.
The size of your down payment also matters. Putting down the traditional 20% of a home’s purchase price has both pros and cons. Although a high down payment is advantageous financially over the long term, “it is not always the fastest way to get to breakeven,” researchers wrote in their analysis.
A smaller down payment means a bigger mortgage and more interest paid over time. What’s more, lenders typically require mortgage insurance for buyers with small down payments, which can drive up your costs.
How long you’re planning to stay in a home is another big consideration in the rent-versus-own calculus. Buyers who expect to relocate after just a couple of years won’t own the home long enough to recoup their closing costs, let alone begin building equity.
But it’s also important to remember that equity tied up in a home carries an opportunity cost versus liquid cash. People might choose to rent or buy with a smaller down payment because they prefer to be able to invest the remaining funds.
This point ties into one final factor in Zillow’s calculations. They assume that renters are taking the amount of money they would have otherwise needed for a down payment and closing costs and investing it. Of course, a large — and growing, as home prices have risen — number of renters haven’t become homeowners precisely because they don’t have the funds for a down payment and closing costs.
So keep in mind: If you’re a renter angling for a financial edge over homeowners, it helps to have a cash stash.
