Should Residents Buy a Home or Rent? The Real 2026 Math
The most common financial mistake residents make with housing is not that they buy instead of rent — it is that they decide without running the actual numbers.
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Helpful Resources
- Resident Physician Salary (2026): What You Actually Make by Year, Specialty, and Location
- You Just Signed Your First Attending Contract. Should You Buy a House, Rent, Buy Land, or Do Something Else?
- Moonlighting as a Resident: Taxes, Contracts, and How Much You Can Actually Make (2026)
- The Resident's Financial Masterclass
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Key takeaways
The most common financial mistake residents make with housing is not that they buy instead of rent — it is that they decide without running the actual numbers for their specific situation. Some residents who buy come out ahead. Many who buy come out behind. And the difference between the two outcomes is almost entirely determined by three variables: how long they stay in the home, what the local market looks like, and whether they can actually afford the true cost of ownership on a resident's salary.
The conventional wisdom — "just rent during residency, it's not worth buying" — is correct for most residents in most situations. A common rule of thumb puts the break-even point for owning versus renting at five to seven years, which is on the longer end of the residency plus or minus fellowship spectrum. A 3-year internal medicine resident who matches to a fellowship in a different city has effectively zero realistic scenario where buying made financial sense.
But the blanket "never buy during residency" advice misses the specific scenarios where buying genuinely wins — and there are real ones. This guide runs the actual math so you can make the decision based on your numbers rather than a rule of thumb that may not apply to you.
The Core Problem: Transaction Costs Are Permanent Losses
The rent vs. buy calculation for residents starts and ends with transaction costs — and most residents dramatically underestimate them.
Buying a home costs 2 to 5 percent of the purchase price upfront in closing costs, according to the CFPB — loan origination fees, title insurance, appraisal, attorney fees, prepaid taxes and insurance, and other lender charges. On a $400,000 home, that is $8,000 to $20,000 paid at closing regardless of how long you stay.
Selling a home can cost 5 to 8 percent of the sale price, the range this guide assumes: agent commissions, plus transfer taxes, attorney fees, and any repairs required before sale. Commissions are set by agreement, and since NAR's settlement practice changes took effect on August 17, 2024, buyers sign a written agreement with their agent before touring homes. On that same $400,000 home, 5 to 8 percent is $20,000 to $32,000 at sale.
Combined transaction costs: $28,000 to $52,000 on a $400,000 home purchase and subsequent sale — money gone before a single dollar of equity is counted.
This is the math that most rent vs. buy discussions skip. The home must appreciate enough to cover these transaction costs before you have broken even financially on the purchase. Assume 3 percent appreciation a year (an assumption, not a forecast) and the high end of those costs, $52,000. A $400,000 home is then worth approximately:
- •After 1 year: $412,000 — appreciation gain of $12,000, net loss after transaction costs of about −$40,000
- •After 2 years: $424,360 — appreciation gain of $24,360, net loss of about −$27,600
- •After 3 years: $437,090 — appreciation gain of $37,090, net loss of about −$14,900
- •After 5 years: $463,710 — appreciation gain of $63,710, net of about +$11,700: the first net positive outcome
- •After 7 years: $491,950 — appreciation gain of $91,950, clear positive outcome
At the low end of the range ($28,000), appreciation covers the transaction costs in about three years. Neither version counts the monthly cost gap below, which usually matters more.
The longer you are in a home, the better you are going to do in terms of recouping value. If you are going to be in a home for less than four years, it will be harder to recoup those costs. Four years is enough only when owning costs little more each month than renting. Once the monthly cost gap is counted, the worked examples below don't break even until around year 9 to 10.
The Full Monthly Cost Comparison: What Residents Actually Pay
The monthly comparison between renting and buying is more complex than the mortgage payment versus rent payment. Here is the complete monthly cost structure for each option.
Scenario: A PGY-2 internal medicine resident in a mid-cost city considering a $350,000 townhouse versus renting a comparable unit for $1,800 per month.
Monthly cost of buying ($350,000 home, physician mortgage at an assumed 7.25%, 0% down):
| Cost Component | Monthly Amount |
|---|---|
| Principal and interest (30-year, 7.25%) | $2,388 |
| Property tax (1.8% effective rate) | $525 |
| Homeowners insurance | $150 |
| HOA (if applicable) | $200 |
| Maintenance reserve (1% annually) | $292 |
| PMI | $0 (physician mortgage) |
| Total monthly housing cost | $3,555 |
- Monthly Amount
- $2,388
- Monthly Amount
- $525
- Monthly Amount
- $150
- Monthly Amount
- $200
- Monthly Amount
- $292
- Monthly Amount
- $0 (physician mortgage)
- Monthly Amount
- $3,555
Monthly cost of renting (comparable unit):
| Cost Component | Monthly Amount |
|---|---|
| Rent | $1,800 |
| Renters insurance | $20 |
| Total monthly housing cost | $1,820 |
- Monthly Amount
- $1,800
- Monthly Amount
- $20
- Monthly Amount
- $1,820
Monthly difference: $3,555 − $1,820 = $1,735 per month more expensive to own
That $1,735 monthly gap — if invested rather than spent on ownership costs — at 7 percent annual return grows to:
- After 3 years: approximately $69,000
- After 5 years: approximately $124,000
If you can rent a home for $3,500 a month or buy an equivalent home with a total monthly housing cost of $4,368, over three years you could invest that $868 per month difference and end up with about $34,700 at 7 percent, a sum the owner's equity, after selling costs, would have to beat. If you lived in the same home for seven to ten years, buying would eventually make more sense.
Interest rates drive much of the gap. Freddie Mac's 30-year fixed average was 7.18 percent for the week of November 5, 2026, against an average of 3.94 percent across 2019 in Freddie Mac's weekly survey data. Physician mortgage rates aren't published, so quote them yourself. At rates like these, the monthly cost of owning often exceeds what renting the same home costs, which is a main reason renting makes sense for more residents now than it did in 2019.
When Buying During Residency Actually Makes Financial Sense
The case for buying during residency exists — it is just narrower than most residents initially believe.
Condition 1: You will stay in the same city for your next position.
This is the single most important variable. A resident who plans to stay in the same metropolitan area for fellowship and then for their first attending job faces a fundamentally different math than one who may move. Physician mortgages allow residents to buy in areas where they plan to stay long-term, locking in home prices before they start earning their attending salary.
A PGY-1 internist who plans to stay at the same institution for a cardiology fellowship, and then to work as an attending in the same city, has a 6 to 8 year time horizon. That can reach break-even in markets where owning costs little more each month than renting, but in this guide's worked examples (no down payment at 7.25%), break-even arrives around year 9 to 10. Buying at the beginning of that window can make genuine financial sense if the resident stays on as an attending long enough, or if local numbers put break-even sooner.
Condition 2: The monthly cost of ownership is competitive with rent in your specific market.
In markets where rent is expensive relative to home prices — some secondary and tertiary markets in the Midwest and South — the monthly cost comparison can favor buying even at 2026 interest rates. A resident who can buy a home for $180,000 in a market where rent for a comparable unit is $1,700 per month may find the monthly costs roughly competitive: at this guide's inputs (7.25%, no down payment, 1.8% property tax, 1% maintenance), owning runs about $1,228 in principal and interest, $270 in property tax and $150 in maintenance, or about $1,650 a month before homeowners insurance. That largely removes the opportunity cost argument for renting.
If you know for a fact you will stay in the same metro area post-residency and plan to work nearby as an attending, the math might start to lean in favor of buying.
Condition 3: You have cash for closing costs without depleting your emergency fund.
Even though there is typically no down payment with a physician mortgage, you will still need cash for closing costs, which the CFPB puts at 2 to 5 percent of the purchase price. On a $350,000 home, that is $7,000 to $17,500 in cash at closing — separate from any emergency reserves you need to maintain.
Do not use your emergency fund as your down payment. If anything, you will need to beef up your emergency fund once you become a homeowner, as things around the house immediately seem to break as soon as you move in.
A resident who would need to drain their emergency fund to cover closing costs is not financially ready to buy, regardless of whether the long-term math might otherwise work.
Condition 4: Your partner has stable income in the same city.
Dual-income households where both partners are committed to the same geographic area have meaningfully less relocation risk and more financial cushion to absorb the carrying costs of homeownership. A resident married to a physician spouse already established in the same city, or a partner with a location-stable career, faces far less uncertainty than a single resident who is the only income source.
Condition 5: The local market is buyer-favorable.
In a buyer's market, sellers are motivated, prices have corrected from peaks, and negotiating power has shifted to buyers. Purchasing a home in a buyer's market reduces the risk of overpaying and improves the probability of appreciation from the purchase price. Purchasing in a market that has already appreciated significantly reduces upside and increases transaction cost risk.
When Renting Is Clearly the Right Answer
You are applying to fellowships. A resident who has any meaningful probability of matching to a fellowship in a different city should not buy a home. Fellowship matching is competitive and location-constrained — you go where you match, not necessarily where you want to live. The transaction costs of selling a home to move for fellowship run $20,000 to $32,000 on a $400,000 home at the 5 to 8 percent this guide assumes — far exceeding any equity built in 1 to 2 years of ownership.
Your residency is 3 years or shorter. Three years is not going to be long enough to break even, and even four years is borderline. By five years, the numbers start to break even in this scenario. However, that is longer than most residents will remain in the area. A 3-year family medicine or internal medicine resident who has not decided where they will practice attending medicine should almost certainly rent.
You do not have the cash for closing costs. If buying requires you to deplete your emergency fund, borrow additional money beyond the mortgage, or rely on a gift from family that is not already in your account, your financial position is not strong enough to absorb the carrying costs and unexpected repairs that homeownership introduces.
You are early in a long residency and unsure of your fellowship or practice plans. A PGY-1 in a 7-year integrated surgical program who does not yet know what subspecialty they will pursue, where they will fellowship, or where they will practice has enormous uncertainty about their 7 to 10-year geographic trajectory. Renting preserves all options.
Your target city has rent-to-price ratios favoring renting. In San Francisco, New York, Boston, and other high-cost coastal markets, home prices are so elevated relative to rent that buying rarely makes financial sense for a resident. Run the monthly numbers for a comparable unit: when owning costs far more each month than renting it, no realistic training timeline recovers the difference on a resident's salary.
The Physician Mortgage Factor: Does It Change the Calculation?
Physician mortgages eliminate several of the traditional barriers to resident homeownership — the down payment requirement, PMI, and the income documentation challenge. But eliminating barriers to buying is not the same as making buying a good financial decision.
The very features that make physician mortgages appealing to residents can also make them a double-edged sword. When your salary is capped and you are staring down a potential move in three years, the math starts to matter a lot more than the freedom to paint your walls.
What physician mortgages actually do:
- • Eliminate the down payment requirement — several programs offer 0% down up to $1 million (Truist, for example; see our lender comparison)
- • Eliminate PMI, which Freddie Mac estimates at $30 to $70 a month per $100,000 borrowed: about $105 to $245 a month on a $350,000 loan
- • At some lenders, exclude deferred student loans from DTI (Truist does if they stay deferred 12+ months past closing), where Fannie Mae would count 1% of the balance
- • Accept a signed attending contract as qualifying income for residents purchasing near training end
What physician mortgages do not change:
- × The monthly carrying cost of ownership versus renting
- × The transaction costs at purchase and sale
- × The time horizon required to break even
- × The interest rate environment that sets your carrying cost relative to rent
A physician mortgage makes it possible for a resident to buy a home that would otherwise be inaccessible. It does not make buying advisable when the underlying math does not support the time horizon. For a full breakdown of which lenders offer physician mortgages for residents and what their programs include, see our physician mortgage lender comparison page.
For residents who are buying near the end of training and qualifying on a future attending contract, see our Do Residents Qualify for a Physician Mortgage guide.
The Rent vs. Buy Calculation: Running Your Own Numbers
Rather than relying on general guidance, here is how to run this calculation for your specific situation.
Step 1: Determine your true monthly cost of ownership.
Get a mortgage quote from a physician mortgage lender for your target home price and current rates. Add: property taxes (ask a local agent), homeowners insurance (actual quote), HOA fees, and maintenance reserve (1% of value ÷ 12). This is your true monthly cost — not just the mortgage payment.
Step 2: Calculate the monthly gap between renting and buying.
Find the rent for a comparable unit in your target neighborhood. Subtract from your total monthly ownership cost. This is your monthly opportunity cost of buying.
Step 3: Find the year buying catches up.
Add up the costs of owning that you don't get back: mortgage interest, property taxes, insurance, HOA fees, maintenance, about 3% of the price to buy and about 6% to sell. Subtract the home's appreciation (this guide uses 3% a year). The principal you pay down isn't a cost, because you get it back when you sell. Compare that total with the rent you would have paid over the same years. The first year owning comes out cheaper is your break-even.
Step 4: Compare your break-even timeline to your expected time in the home.
If your break-even timeline exceeds your expected time in the home, renting is the financially superior choice. If you expect to stay meaningfully longer than break-even, buying has a financial case.
Step 5: Stress-test for uncertainty.
What is the probability you will need to sell early — for a fellowship, for a change in relationship, for a specialty switch? Apply that probability to your break-even analysis. Even a 25 percent probability of an early sale materially degrades the expected value of buying.
The Lifestyle Variables That the Math Cannot Capture
The financial analysis is the right starting point. It is not the only input.
Stability and roots. Homeownership creates community connection in a way renting typically does not. A resident who wants a vegetable garden, the ability to get a dog without landlord permission, the feeling of a space that is genuinely theirs — these are legitimate quality of life considerations that have real value even if they do not appear in a spreadsheet.
School districts. Residents with school-age children may find that the best schools in their city are only accessible through homeownership in specific neighborhoods. If school quality is a primary factor in where the family needs to live, the financial trade-offs of early buying may be worth accepting.
Relationship stability. A married resident whose partner is settled in the city with no relocation risk has a very different risk profile than a single resident with an uncertain attending position location. The personal situation matters as much as the financial math in many cases.
Psychological comfort. Some residents genuinely hate the apartment-renting experience — landlord relationships, noise, lack of space, lease renewal anxiety. For these residents, the psychological benefit of homeownership has real value that should factor into the decision alongside the financial analysis.
The Scenarios: A Real World Contrast
When Buying Makes Sense
A PGY-1 psychiatry resident in Columbus, Ohio:
- • Psychiatry residency: 4 years
- • Clear intent to stay in Columbus long-term
- • Target home: $280,000 townhouse
- • Comparable rent: $1,650 per month
Monthly cost of ownership:
- • Mortgage at 7.25%: $1,910
- • Property taxes, insurance, HOA: $610
- • Maintenance reserve: $233
- Total: $2,753/mo (Gap: $1,103)
Break-even analysis:
- • After 4 years (end of residency): owning has cost about $112,200 after appreciation, against about $82,800 in rent
- • Buying is about $29,400 behind at that point
- Break-even: about year 10
Verdict: Buying can make sense here only because this resident plans to stay in Columbus long after residency, well past the roughly 10-year break-even. If there's a real chance of leaving after training, renting wins.
When Renting Makes Sense
A PGY-1 internal medicine resident in Boston, MA:
- • Internal medicine residency: 3 years
- • Cardiology fellowship planned (moves likely)
- • Target home: $550,000 condo
- • Comparable rent: $3,200 per month
Monthly cost of ownership:
- • Mortgage at 7.25%: $3,752
- • Property taxes, insurance, HOA: $1,001
- • Maintenance: $458
- Total: $5,211/mo (Gap: $2,011)
Break-even analysis:
- • After 3 years (the likely move for fellowship): owning has cost about $172,000 after appreciation, against about $118,700 in rent
- • Buying is about $53,300 behind at that point
- Break-even: about year 9
Verdict: Renting is clearly the right answer. Selling at the move date would leave this resident about $53,000 worse off than renting, and break-even is six years past the planned move.
Both examples assume no down payment on a 30-year physician mortgage at 7.25%, 3% annual appreciation, rent rising 3% a year, about 3% of the price in closing costs and 6% to sell. They leave out mortgage interest and property tax deductions, since most residents take the standard deduction, and they don't count investment returns on the monthly difference, which would favor renting further.
Frequently Asked Questions
Should most residents buy a home or rent?
Can residents qualify for a physician mortgage?
How long do residents need to stay in a home to break even?
Is buying during residency "throwing money away"?
What if I plan to rent out my home when I leave residency?
What is the right home price for a resident considering buying?
Sources
- Figure out how much you want to spend (closing costs of 2% to 5% of the purchase price), Consumer Financial Protection Bureau. Accessed September 27, 2026.
- Get the Facts (settlement practice changes effective August 17, 2024; written buyer agreements), National Association of Realtors. Accessed September 27, 2026.
- Primary Mortgage Market Survey (30-year fixed average of 7.18% as of November 5, 2026, updated weekly via FRED), Freddie Mac.
- PMMS archives and historical weekly data (2019 weekly rates, averaged by MedMoneyGuide to 3.94%), Freddie Mac. Accessed September 27, 2026.
- What Is Private Mortgage Insurance?, Freddie Mac (My Home). Accessed September 27, 2026.
- Selling Guide B3-6-05, Monthly Debt Obligations (student loans), Fannie Mae. Accessed September 27, 2026.
- Truist Doctor Loan (disclosures on deferred student loans), Truist. Accessed September 27, 2026.
- Doctor Loan (closing up to 90 days before a residency or job starts), Bank of America. Accessed September 27, 2026. Huntington and BMO terms: our Huntington and BMO reviews.
- Publication 523, Selling Your Home (2-of-5-year ownership and use test; depreciation on rental use not excludable), Internal Revenue Service. Accessed November 10, 2026.
Helpful Calculators:
- Physician Mortgage Calculator — Model your monthly payment, PMI savings, and true ownership cost
Related reading: Do Residents Qualify for a Physician Mortgage? (2026) · Physician Mortgage vs. Conventional Loan · PGY-1 Financial Checklist: The First 30 Days of Residency
Disclaimer: This article is for educational purposes only and does not constitute financial, mortgage, or real estate advice. Housing market conditions, interest rates, property taxes, and transaction costs vary significantly by location, market conditions, and individual financial circumstances. Always model the specific numbers for your situation — including your local market, current mortgage rates, and your expected time in the home — before making any housing decision. MedMoneyGuide has no affiliate or advertising relationships with the companies it covers.
About the Author
Joshua Dunigan, DO | Family Medicine Resident & Founder
I'm a family medicine resident physician in Des Moines, Iowa (class of 2027). I founded MedMoneyGuide to give physicians specialty-specific financial guidance, with sources you can check.