Conventional wisdom says buying a home is always a good investment. In 2026, with mortgage rates at 6.8% and home prices at all-time highs, that wisdom needs a second look.
The real cost of owning
On a $500,000 home with 20% down at 6.8%, your principal + interest is $2,608/month. But that's only half the story. Add property tax (~1.1%), homeowners insurance (~0.3%), HOA (~$300/mo), and maintenance (1% of home value/year). True monthly cost: around $3,800.
The opportunity cost
That $100k down payment invested in a diversified index fund at 7% annual return becomes $196k in 10 years. Renting a comparable home for $2,800/mo for those 10 years costs $336k (assuming 3% rent inflation) — but you kept your $100k liquid and compounding.
When buying wins
- You plan to stay 7+ years (transaction costs amortize)
- Rent-to-price ratio in your market is >5%
- Your locked mortgage rate is below expected investment return - 1%
- You value stability (kids in school, aging parents, etc.) over flexibility
When renting wins
- High-cost-of-living metros (NYC, SF, LA) with 2-3% rent-to-price
- Career mobility likely within 5 years
- You'd rather invest than maintain
- Buying would stretch debt-to-income above 40%
Use our Mortgage Calculator to model your specific numbers.