Rent vs. Buy at $420,000: The Real Cost Gap in 8 US Cities
Buying a $420,000 home costs $3,050–$4,120/mo all-in depending on city. We ran the full numbers in 8 markets to show where renting still beats buying.
Disclaimer: Tax figures reflect estimated 2026 projections based on IRS Publication 15-T. Tax law changes frequently. Verify with a CPA or the IRS Tax Withholding Estimator. Calcwyse.com is not a tax advisor.
Renting is cheaper every month in all 8 cities here. The question is how many years you need to own before equity closes the gap — and that answer varies by $60,000 depending on where you buy.
Phoenix vs. Austin — The Two Markets Buyers Ask About Most
Phoenix and Austin lead the “should I buy?” conversation. The monthly numbers don’t make an easy case for either.
🏙️ Monthly Ownership Cost — Phoenix, AZ vs. Austin, TX · $420,000 Purchase
Phoenix, AZ Austin, TX Mortgage (P&I, 6.8%, 30yr) $2,743 $2,743 Property tax (monthly) $350 $700 Homeowner’s insurance $180 $210 HOA (median, if applicable) $0 $85 Maintenance reserve (1%/yr) $350 $350 Total monthly ownership cost $3,623 $4,088 Median 1BR rent (Zillow, May 2026) $1,390 $1,480 Monthly rent gap $2,233 $2,608 6.8% rate (~6.8% as of May 2026 per Freddie Mac PMMS), 20% down ($84,000), 30-year fixed. Property tax: AZ 0.6% effective, TX 1.6% effective.
Austin’s property tax is the story. At 1.6% effective on $420,000, that’s $560/month in property taxes before insurance. The rent gap — $2,608 — is $31,296 a year. Invested at 7%, that compounds to roughly $186,000 over ten years.
That’s not an argument against buying in Austin. It’s the break-even math: you need about 9–11 years of ownership for equity to offset the premium.
Phoenix is $2,233/month more expensive to own than to rent. HOA-free single-family homes in Tempe rent for $1,350–$1,400/month per Zillow, May 2026. Ownership break-even there runs about 6–8 years at 3% annual appreciation.
Most buyers in Phoenix and Austin don’t model their break-even before signing — they model the mortgage payment. Those are two very different numbers.
Monthly Budget: Renting in Phoenix vs. Owning
Here’s what a single renter’s monthly budget looks like in Phoenix, followed by the equivalent for an owner.
🏙️ Monthly Budget — Phoenix, AZ (Renter) · ~$5,200/mo median take-home
Expense Est. monthly Source Rent — 1BR, Tempe $1,390 Zillow, May 2026 Groceries (Fry’s Food Store) $380 Numbeo 2026 Transit (Valley Metro, monthly pass) $64 Valley Metro Phone (T-Mobile Essentials) $60 Carrier site Utilities $140 BLS CES Total essentials $2,034 Left over $3,166 Estimates for a single renter. Rent burden: 26.7% of take-home.
That’s 26.7% of take-home going to rent — just above the 30% threshold financial planners use as the standard affordability cut-off. Below it, actually. That’s a low rent burden for a Sun Belt metro of this size.
Now flip to ownership at $3,623/month all-in. That’s 69.7% of the same take-home — before groceries, transit, or anything else. The owner’s monthly surplus shrinks from $3,166 to $-657. The math only works if the household income is well above the median, or the home is a two-income purchase.
Six More Cities, Full Cost Stack
Estimated monthly cost of owning a $420,000 home — 6 more cities (2026):
- 🟢 Las Vegas, NV — $3,050/mo | Rent gap: $1,620 | Nevada’s 0.5% effective property tax is the lowest here
- 🟢 Tampa, FL — $3,210/mo | Rent gap: $1,710 | No state income tax, but homeowner’s insurance runs $290/mo
- 🟡 Charlotte, NC — $3,190/mo | Rent gap: $1,750 | Best buyer math in the Southeast at current rents
- 🟡 Denver, CO — $3,480/mo | Rent gap: $2,010 | Flat 4.4% state income tax and SALT cap hit buyers hard
- 🔴 Seattle, WA — $3,940/mo | Rent gap: $2,350 | No income tax, but median rent is $1,590 — the gap narrows
- 🔴 Chicago, IL — $4,120/mo | Rent gap: $2,500 | Cook County property tax hits 2.1% effective — highest in this list
Sources: Freddie Mac PMMS (rate), county assessor offices (tax rates), Zillow (rent, May 2026), Bureau of Labor Statistics (insurance estimates)
Chicago earns the red flag for one reason. Cook County property tax on $420,000 is roughly $735/month — before insurance, before maintenance. Most buyers don’t model that until the first full-year tax bill arrives.
Charlotte is the outlier. Rent gap of $1,750 is the lowest in this group, and appreciation in the South End and NoDa corridors has averaged 5–6% annually over the past three years. Break-even for Charlotte buyers runs about 4–5 years. That’s the best number in this dataset.
The $420,000 Cost Stack — Line by Line
Most buyers see the mortgage payment. Here’s what the full stack actually looks like.
At ~6.8% as of May 2026 per Freddie Mac PMMS on a $336,000 loan (20% down), principal and interest is $2,743/month. Add the rest:
📊 $420,000 Home — Estimated 2026 Annual Ownership Cost Snapshot
Annual Monthly Bi-weekly P&I (6.8%, $336k loan) $32,916 $2,743 $1,266 Property tax (national avg 0.9%) $3,780 $315 $145 Homeowner’s insurance $2,280 $190 $88 Maintenance (1% of value/yr) $4,200 $350 $162 PMI (if <20% down, 0.5%) $0* $0* $0* Total (20% down) $43,176 $3,598 $1,661 Total (10% down + PMI) $48,696 $4,058 $1,873 20% down assumed in base case. 10% down adds $1,520/year PMI until ~22% equity is reached. Freddie Mac PMMS · County assessor avg · IRS Publication 15-T · BLS CES
Quick math: $420,000 purchase → $43,176/year all-in (20% down) — $3,598/month or $1,661 bi-weekly. Estimated · 2026 data · 20% down · single purchaser · national average tax and insurance rates.
The 1% maintenance rule catches most buyers off guard. On $420,000, that’s $4,200/year — real cash that doesn’t appear in the mortgage payment but shows up when the HVAC quits or the roof needs work.
Quick Answers on Buying a $420,000 Home in 2026
What’s the all-in monthly cost of a $420,000 home? At 6.8% with 20% down, principal and interest is $2,743. Add national-average property tax, insurance, and maintenance and the total is $3,598/month. In high-tax cities like Chicago it reaches $4,120. For more on this topic, see our guide: $150,000 Mortgage at 5.5%: Monthly Payment, Amortization & Total Interest.
How much income do you need to qualify? Lenders want total debt service under 43% of gross income. With $2,743 P&I plus $505 estimated taxes and insurance, you need roughly $95,000–$105,000 gross household income to qualify at this price point.
Is renting cheaper than buying a $420,000 home right now? Monthly, yes — in every city in this analysis. The rent gap runs $1,620/month in Las Vegas to $2,608 in Austin. Whether buying wins long-term depends on how long you stay and what appreciation does.
What’s the break-even year for buying vs. renting? Charlotte and Las Vegas: 4–5 years at 3% appreciation. Phoenix and Denver: 6–8 years. Chicago and Austin: 9–11 years. Short time horizon means renting is almost always the cheaper total outcome.
Does the $420,000 price include closing costs? No. Closing costs run 2–5% of the purchase price — $8,400–$21,000 on top of your down payment. Budget $95,000–$110,000 in total upfront cash at 20% down.
Frequently Asked Questions
What happens to the math if home values drop? The equity buildup argument collapses. Your ownership premium becomes a pure cost with nothing to offset it. Buyers who purchased in some Sun Belt markets in 2022–2023 and sold in 2024–2025 saw exactly this. If you’re buying with a 3-year horizon, you’re taking real depreciation risk in a flat or declining market.
What’s the mortgage payment with 10% down instead of 20%? With 10% down ($42,000), your loan is $378,000 at 6.8%. P&I is $2,466/month, plus roughly $158/month in PMI. Total P&I + PMI: $2,624. Add median taxes, insurance, and maintenance and you’re at $3,479/month — not dramatically less than 20% down, but with less cash upfront.
Is buying a $420,000 condo different from a house? Yes — and usually less favorable. Condos carry HOA fees ($200–$500/month is common in Phoenix, Las Vegas, and Charlotte) plus special assessments that land without warning. Condo appreciation also lags single-family homes in most metros. Run the break-even separately; the numbers rarely match a house at the same price.
What if I’m self-employed and buying at this price point? Qualifying gets harder. Lenders use two-year average net income from your Schedule C — not gross revenue. If your net income averages $90,000 after deductions, you may qualify for less than a W-2 employee at the same gross. Use our self-employment tax calculator to see your net first, then model the mortgage.
Check Your Exact Scenario
Every market is different. Run your numbers — your city, your rate, your down payment: