Renting vs Buying a Home: The 6% Rule (2026 Math)

Is renting really throwing money away? We run the real numbers on a typical US home ($417,500 with a 7.32% mortgage) and update Ben Felix's famous 5% rule for today's rates. The result: a 6% rule you can run on any home in 30 seconds. In this video: • Where a $2,990/month payment goes in year one (only about $266 builds equity) • Why about 88% of your year-one mortgage payments are interest • The 5% rule rebuilt with 2026 numbers: about 6% of the home's value per year • The quick test: home price × 6% ÷ 12, compared with rent for a similar home • Buying and selling costs, and why it can take 6 to 9 years for buying to pull ahead • 30 years, same house: how $600 of rent flips the answer Chapters 0:00 Is renting throwing money away? 0:39 What a mortgage payment really buys 2:11 The fair way to compare 2:42 The 5% rule, updated for 2026 4:23 The rent test (and a price check for any city) 5:19 Costs that aren't in the 6% 5:49 The catch for renters 6:14 Buying and selling tolls: why time matters 7:03 30 years, same house, opposite answers 7:52 How to run it on any home 8:35 What the math doesn't measure 9:05 Recap The numbers we used (an illustration, not a forecast) Home price $417,500 · 20% down · 7.32% 30-year fixed · property tax 1% · maintenance 1% · home growth 3.5%/yr · investment return 7%/yr · rent growth 3%/yr · buying costs 3% · selling costs 6%. Pre-tax. Excludes insurance, HOA fees, tax deductions and taxes on investment gains. Your city, rate and timeline will change the answer. Sources • Median existing-home price, September 2026: National Association of Realtors (nar.realtor) • Average 30-year fixed rate, October 22, 2026: Freddie Mac Primary Mortgage Market Survey (freddiemac.com/pmms) • The original 5% rule: Ben Felix, PWL Capital:    • Renting vs. Buying a Home: The 5% Rule   • Property tax (about 0.9% national effective rate): ATTOM • Long-run US home price growth: Redfin; S&P CoreLogic Case-Shiller This video is for education only. It is not financial, tax or legal advice for your situation. Talk to a qualified professional before making a housing decision. PennyOnPenny explains how money really works, one animated idea at a time. Next up: why your mortgage is mostly interest at first. #rentvsbuy #personalfinance #realestate