Quick answer
In Memphis, buying breaks even around year 14. Monthly ownership cost $1,462 vs 2BR rent $1,220/mo. If you plan to stay 14+ years, buy. Less, rent.
Rent vs Buy · TN
Rent vs Buy in Memphis (2026)
Real math using TN's 0.71% property tax rate, $2,000/year average insurance, and a 6.8% 30-year fixed mortgage. Accounts for opportunity cost — what the down payment would earn invested at 7%.
Last updated: April 23, 2026
Verdict at current rates
Buy after year 14
If you stay 14+ years in Memphis, buying pulls ahead of renting + investing the down payment. Less than 14 years, rent and invest the difference.
Monthly Cost Breakdown
Buying
$1,462/mo
Mortgage P&I
$156,000 loan, 30yr @ 6.8%
$1,017
Property tax
0.71% of assessed (TN avg)
$115
Homeowners insurance
$2,000/yr TN avg
$167
Maintenance
1%/yr of home value
$163
Cash at close: ~$43,875 ($20% down + fees)
Renting
$1,220/mo
2BR rent (median)
Memphis market rate
$1,220
Renters insurance
~$15/mo typical
$15
Down payment invested
$39,000 growing at 7%/yr
(opportunity cost)
Monthly gap: $242 cheaper than buying. Renter invests that difference.
Year-by-Year Net Position
"Buy wins by" = what you'd clear selling the home minus what the renter has in investments. Positive = buy ahead.
| Year | Home value | Buyer equity (net) | Renter portfolio (net) | Buy wins by |
|---|---|---|---|---|
| Year 5 | $226,058 | $-62,651 | $-9,439 | $-53,211 |
| Year 10 | $262,064 | $-96,066 | $-67,484 | $-28,583 |
| Year 15 | $303,804 | $-118,587 | $-131,545 | +$12,958 |
| Year 30 | $473,316 | $-67,745 | $-308,191 | +$240,446 |
Break-even: year 14.That's when accumulated home equity minus ownership costs finally exceeds the renter's invested portfolio.
Assumptions
Every rent-vs-buy calculator depends on the assumptions. Here are ours — all transparent, none cherry-picked to bias the answer.
This is a rule-of-thumb calculator. Real decisions involve your specific tax bracket, any HOA, mortgage points, closing-cost negotiations, and exact loan terms.
Frequently Asked Questions
Is it better to rent or buy in Memphis?
In Memphis with a 20% down payment on a median $195K home at 6.8% mortgage rate, buying breaks even around year 14. If you plan to stay less than 14 years, renting wins financially. If you'll stay 14+ years, buying pulls ahead.
What's the monthly cost of owning a home in Memphis?
On a median $195K home with 20% down at 6.8% fixed rate: mortgage P&I $1,017, property tax $115 (0.71% of assessed value), homeowners insurance $167 (TN average $2,000/year), and maintenance $163 (1% of home value/year). Total: $1,462/month.
How much down payment do I need to buy in Memphis?
20% down on a median Memphis home ($195K) is $39,000. Plus closing costs of roughly 2.5% ($4,875). Total cash-to-close: about $43,875. FHA loans allow 3.5% down ($6,825) but require mortgage insurance that adds ~$76/month.
What's the 10-year cost of renting vs buying in Memphis?
Over 10 years in Memphis: renters pay $167,831 in cumulative rent but have $100,348 invested (assuming 7% return on the $39,000 down payment + monthly savings). Buyers have paid $209,175 in total ownership costs and hold $128,833 in home equity. Net: renting is ahead by $28,583 at year 10.