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

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Mulling over buying vs. renting a home means you have to consider several factors. For instance, do you prefer the freedom of a short-term housing commitment, or the stability and financial benefits of homeownership? How much maintenance do you want to be responsible for? The list goes on.

Here’s what you should think about before you settle on whether to rent or buy.

Buying vs. renting a home: The basics

When you’re renting your home, you agree to pay rent to a landlord in exchange for the temporary use of their property as your home. Buying a home often means you work with a mortgage lender — unless you’re paying cash — to finance a home purchase. Your lender puts up the cash to buy the home, and you agree to repay the loan over an extended period of time, all while committing to use that home as your primary residence.

Renters often rely on their landlord or property manager to handle maintenance and repairs. On the other hand, homeowners are responsible for maintaining and repairing their property. Additionally, you’ll likely have lower upfront costs with renting versus owning.

Mortgage vs. rent costs

The median monthly cost for homeowners with a mortgage is $1,558, while median gross monthly rent is $1,023, according to data from the U.S. Census Bureau. Here’s a breakdown of some common costs of buying vs. renting a home.

Homebuyer Costs Renter Costs
  • Down payment
  • Closing costs
  • Monthly mortgage payments
  • Homeowners insurance premiums
  • Property taxes
  • Maintenance and repairs
  • Utilities (electricity, gas, water, trash)
  • Cable and internet
  • Application fees
  • Security deposit
  • Monthly rent payments
  • Renters insurance premiums
  • Parking fees
  • Pet fees
  • Utilities (electricity, gas, water, trash)
  • Cable and internet


In many ways, renting a home offers more flexibility than homeownership. If you don’t like your neighbor, your job situation changes or you want to move across the country, the process and expense of ending your lease is much simpler than selling a home. On the flip side, though, you won’t build equity from rent payments as you would while repaying a mortgage.

If you don’t have a solid credit history and financial cushion, buying a home could be more costly, too. There are bad credit mortgage options, but renting is a good way to improve your credit and save for a down payment to better position yourself for homeownership. LendingTree’s home affordability calculator can help take some of the guesswork out of finding homes that fit within your budget once you’re ready to buy.

Pros and cons of buying a home


  • You build equity. As you pay down your mortgage and (hopefully) see your home’s value increase, you build equity, which is your ownership stake in the home. That money can later be used to buy an investment property, consolidate debt or fulfill another goal.
  • You make improvements as you desire. In most cases, you don’t have to go through a landlord to make home improvements to your property’s interior or exterior. If you live in an homeowners association, though, you may have to clear improvements with the organization first.
  • You gain some tax benefits. There are tax benefits that come with homeownership, such as the ability to claim deductions related to mortgage interest or the business use of your home.


  • You have more upfront and ongoing costs. You’ll need to cover down payment and closing costs to buy your home. There are also ongoing property taxes, homeowners insurance premiums and, in some cases, homeowners association fees. You may also pay private mortgage insurance if you put down less than 20%.
  • You’re responsible for maintenance and repairs. There’s no landlord to call when your air conditioning unit goes out or you have plumbing issues. You’re on the hook to hire professionals to repair those items (or fix them yourself).
  • You have a risk of going underwater on your mortgage. Home prices could plummet and erase the equity you’ve previously built. If you owe more on your mortgage than your home is worth, then you’ll be underwater on your loan.

Pros and cons of renting a home


  • You have fewer upfront costs than buying. You’ll have to pay a security deposit that could be equal to two or three months’ worth of rent payments, but there’s no down payment or any closing costs when renting a home.
  • You’re typically not responsible for maintenance and repairs. One of the main benefits of renting a home is you’re typically off the hook for maintenance and repairs (unless you cause the damage).
  • You have a shorter-term housing commitment. Most leases have a one-year term. If you’ve found a more suitable place to live once your lease is up, you can move on without looking back.


  • You must answer to your landlord. If you want to paint an accent wall or become a pet owner, you need your landlord’s permission.
  • You have no control over your rent amount. If you renew your lease, there’s no guarantee you’ll pay the same rent for another year. You may be charged extra for pets, too.
  • You won’t build any equity from rent payments. It’s possible to get your security deposit back if you leave your rental in a good condition at move-out time, but you won’t have any equity from all those rent payments.

Is it better to rent or buy a home?

Deciding whether to rent or buy a home is a personal preference, and there’s no magic formula to make the final choice.

It’s important to look at hard numbers and your lifestyle. Even if you can afford to buy a home, it might be wise to continue renting based on your financial objectives and goals. Use LendingTree’s rent vs. buy calculator to help inform your choice.

It might make more sense to rent if:
  • Your job role involves frequent moves.
  • You’d rather not deal with recurring maintenance and repair costs.
  • You’re not interested in committing to a specific community.
  • You need to improve your credit score and pay down your outstanding debt.
It might make more sense to buy if:
  • You’re ready for a long-term housing commitment.
  • You’ve boosted your credit score and reduced your debt.
  • You’ve saved for a down payment and closing costs.
  • You have at least three to six months’ worth of living expenses saved for emergencies.

If you’ve ultimately decided you’re ready to buy, have the following basic line items in place before you approach a mortgage lender:

  • A solid credit profile, including 620 or higher credit score and a history of on-time payments
  • A down payment equal to or greater than 3% of your ideal home price
  • Stable employment and income for the last two years
  • A maximum 43% debt-to-income ratio (the relationship between your monthly debt payments and gross monthly income)

These are general guidelines, but you may find some lenders with more flexibility to work with your specific needs. Find out what the minimum mortgage requirements are for the most common loan types. Knowing these key guidelines may help you boost your chances of qualifying for a home loan when the time is right.


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