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Renting vs. Buying a House: Which Should You Choose?

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If you’re mulling over renting vs buying a house, there are several factors to consider. Buying makes sense if you’re ready for the long-term commitment and financial stability that comes with homeownership. On the other hand, renting may be the better choice if your job keeps relocating, or if you’re just not ready for home maintenance and repair duties yet.

Understanding the pros and cons of each option will help you make the right rent versus buy decision.

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Should I rent or own a home?

In general, you should rent a home if you prefer flexibility, or if your financial house isn’t quite in order with your credit scores, job stability or savings. Most first-time homebuyers need a mortgage to buy a home, which typically requires a 620 credit score, two-years’ worth of job history and at least a 3% down payment.

Buying is a better choice if you’ve built up savings, managed your credit well and hold a stable job with consistent income. It’s also a good option if you’re ready for maintenance and repair responsibilities with the added benefit of building home equity.

Pros and cons of buying vs. renting a home

If you’re on the fence about your rent versus buy decision, take some time to weigh the benefits and drawbacks of each option, outlined in the table below:


  Your payments build equity

  You own your shelter

  You may enjoy tax benefits

  You can renovate the home as you wish

  You're responsible for repairs and upkeep

  You may not qualify for a mortgage

  You could lose money if house prices fall


  You can move when the lease ends

  Your landlord handles repairs and maintenance

  You won’t lose money if house prices fall

  Your landlord could raise rents or sell the property

  You need landlord permission to make updates to the home

  Your payments build your landlord’s equity

The difference between renting vs. buying a home

It’s often said that buying a home is one of the largest investments you’ll make in your future. And while that’s true, it’s also a major financial commitment — and if you’re not ready for it, a dream home can quickly turn into a nightmare.

Don’t fall for the myth that you’re throwing away money by renting. Most people have to pay for shelter, and paying rent shows future mortgage lenders you can manage a monthly housing payment.

Make sure you understand the differences between owning and renting before you decide which is best for you.

Homebuying considerations

  • Ownership. One of the primary draws of homeownership is that it allows you to own the place you live in. A homeowner doesn’t have to worry about rent increases or whether a landlord might sell the home. You can paint the walls, update the flooring or appliances or add landscaping as you wish without a third-party’s permission.
  • Roots. People often buy homes because they want to be a part of a local community, with neighbors that become friends and kids that grow up together in nearby schools. In fact, the typical American homeowner spends 13.2 years in their home, according to a recent Redfin study.
  • Wealth building. Every mortgage payment you make builds home equity. You also reap the benefits of home price increases, which typically happen over time. Home equity can be tapped to make home improvements, consolidate debt or pay for major milestones, like a new business venture or college tuition. And when your mortgage is finally paid off, the home can be sold for a profit or passed on to your relatives.
  • Tax benefits. If you itemize your deductions, you can write off home mortgage interest and any state or local property taxes each year. Keep in mind that over time, the amount of mortgage interest you pay goes down, which reduces your interest deduction. Check with your tax professional to determine whether the deduction makes sense as you pay your loan balance down.
  • Upkeep responsibilities. Owning a home means owning all the responsibilities that go along with it, including home maintenance and repairs. Experts suggest budgeting at least 1% to 4% of your home’s value each year to cover expected — and unexpected — costs.

Renting considerations

  • Moving flexibility. Renting is usually a year-by-year endeavor. If you don’t like the neighborhood, get a great job in another city and need to move quickly or just don’t like staying in the same place for very long, renting gives you the ability to move on without the hassle of selling a home.
  • Landlord responsibilities. Your landlord is on the hook to make major and even minor repairs on a rental property. However, they also have a responsibility to make sure they can rent the property out after you leave, which means they aren’t likely to approve any custom paint colors or unusual improvements.
  • Rent and shelter uncertainty. Unlike a fixed-rate mortgage payment, your rent payment is subject to change every year. In addition, the property owner may decide to sell the rental, which could leave you looking for a new place to rent, depending on the new owner’s plans.

Mortgage vs. rent costs

The median monthly cost for homeowners with a mortgage was $1,897 in May 2022, according to data compiled by the Mortgage Bankers Association. The average rent price was $2,002 for the same time period, according to Redfin data.

Homebuyer costsRenter costs
Down paymentApplication fees
Closing costsSecurity deposit
Monthly mortgage paymentsMonthly rent payments
Homeowners insurance premiumsRenters insurance premiums
Property taxesParking fees
Maintenance and repairsPet fees
Utilities (electricity, gas, water, trash)Utilities (electricity, gas, water, trash)
Cable and internetCable and internet

Making the rent vs. buy decision

Below is a side-by-side look at factors that can influence your buying or renting choice.

Buying a home makes sense if:Renting a home make sense if:
  • You have long-term residency plans 
  • You’re in solid financial shape 
  • You have money set aside for unexpected repairs and ongoing maintenance 
  • You want to build long-term wealth 
  • You plan to move in the near future 
  • Your employment or credit profile is shaky 
  • You haven’t saved up for a down payment 
  • You’re not ready to take on homeownership responsibilities 

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