Renting vs. Buying: Is it Better to Rent or to Own a Home?

The pros and cons of renting vs. buying a home should be considered before making a decision, and we've made a guide to help. The pros of renting a house include: predictable expenses, affordability, and more mobility. The pros of buying a house include: ownership and freedom, equity, and stability.

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Eric Stauffer is a former insurance agent and banker turned consumer advocate. His priority is to help educate individuals and families about the different types of insurance they need, and assist them in finding the best place to get it.

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Written by Eric Stauffer
Founder & Former Insurance Agent Eric Stauffer

Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years Leslie Kasperowicz

UPDATED: Jun 1, 2022

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For many people — especially those under the age of 35 — there comes a time when the decision to either rent a home or settle down and finally purchase a first home, becomes pronounced. Renting vs. buyin a home is a big decision.

Purchasing your first home can be a major life milestone, but renting a home also has its place, and many people may prefer renting over owning a home. There are pros and cons to both options, and it’s important to examine each in the context of your personal situation. Are you going to remain a renter, or are you ready to purchase your first home?

Pros and Cons of Renting a House

As you decide on renting vs. buying your home, it’s a good idea to start with the pros and cons of each. We’ll start with renting.

Renting has been steadily increasing in popularity in the United States, with more families renting now than in the past 50 years. Much of this is due to the lingering effects of the housing crisis from 2008, according to 2016 reports from Pew Research.

The economy has certainly recovered since then, but many people may not have the savings necessary to place a down payment on a home — thus, they rent.

The 2016 report also highlights that many renters are those under the age of 35, although older generations have also become more prominent in the housing market.

Additionally, although past reports showed that education levels greatly determined a person’s ability to rent or own a home, current reports show that even college graduates are still stuck in rentals.

However, renting does have a fair share of both advantages and disadvantages. Although many Americans may dream of owning a home one day, renting has its upsides, and can provide a certain level of freedom to renters.


– Predictable Expenses

One of the biggest advantages of renting a home is the predictability of your rental check. When owning a home, you’re the only person responsible for replacing damaged appliances, making structural changes, or repairing existing issues. Luckily for renters, many of those costly repairs are left to the homeowner.

Instead, renters are only required to pay their rent, rental insurance, and any additional utilities; which can help renters better control and predict their monthly expenses. As a renter, you’re also off the hook for property tax, which can fluctuate in cost every year.

– Affordability

Renting is much more convenient for low-income individuals or those with minimal savings. Although some rentals may ask for a significant security deposit prior to moving in, purchasing a home often requires a significant down payment of anywhere from 3.5 percent to 20 percent of the cost of a home, along with additional closing costs. Without a mortgage payment, renters are less impacted by fluctuating mortgage interest rates. Also, renters normally do not have to worry about property taxes on their place of residence.

For a $200,000 home, that can be anywhere from $7,000 to $40,000 down. Calculating your monthly and yearly expenses can help you determine if it’s more affordable in your situation to either rent or buy a home.

– More Mobility

Finally, renting a home often provides individuals with more freedom to move once their lease has ended. Renting is often seen as a less permanent housing situation, so it works well for individuals interested in living a more nomadic existence, interested in moving towns, or simply looking for short-term, temporary housing.


– No Ownership or Long-Term Stability

Unfortunately, as a renter, you have no ownership over the home you’re staying in, which can mean a lack of ability to remodel the space and only minimal housing stability. If the landlord decides to raise your rent once your lease is up, you may be forced to move in order to find a more affordable place to stay.

Additionally, although there are some strict landlord-tenant laws, landlords can also evict tenants if they want to sell the home or if there is an apparent issue.

– No Equity to Build

Housing is an expense that nearly everyone has to pay — whether you own a home or rent one — so it’s not necessarily true that if you’re renting you’re “throwing money away.”

However, what is true is that the money you’re spending on housing isn’t going towards equity: or the profit you might gain from selling the home after your mortgage is settled. Property values tend to appreciate over time, so you’re missing out on the return on investment that home ownership can provide to property owners.

Although those monthly payments may be a bit more stable than homeownership costs, that money won’t make its way back to you in the form of equity.

– Frequent Moving

Moving can be stressful, and, as a renter, you may have to do it often; the landlord may raise the rent on you or deny a renewal of the lease, or you simply may be in need of a more affordable option in a different part of town. Rental properties turn over on a fairly regular basis. Renting can go hand-in-hand with frequent moves.

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Pros and Cons of Buying a House

As mentioned, renting is a steadily rising trend. However, that same 2016 Pew Research report shows that about 75 million Americans own homes. This is because housing growth has stagnated a bit, but it certainly hasn’t become obsolete.

Many Americans own homes, and there are certainly a lot of perks to homeownership. However, it also comes with its fair share of responsibilities, and there can be some unexpected disadvantages that can be entirely out of the control of the homeowner.


– Ownership and Freedom

Obviously, being able to own your home is a major plus. You can make all the adjustments you want, remodel or repaint rooms, and can decorate the place to your heart’s content. You won’t be required to ask a landlord for permission before you do something, and you can have a bit more freedom in how you maintain and improve the property. If you are very ambitious, you’ll own not only your own home but an investment property or two along the way.

– Equity

As you’re paying off your mortgage, you’ll ideally be earning equity on your property. This means, if you decide to sell the home in the future, you may be able to earn a profit off of the sale. Of course, this is dependent on the stability of the market, the home remaining in good condition, and staying consistent with loan or mortgage payments.

– Stability

Finally, homeownership provides stability to homeowners — as long as their mortgage and all the necessary expenses are paid. They will never have to worry about a landlord kicking them out, or about a potential spike in monthly mortgage expenses (except in the case of property tax, which can fluctuate).


– Large Upfront Costs

Purchasing a home has a handful of hidden costs, but simply getting a mortgage loan can cost a lot of money upfront, as well. As mentioned, down payments on a home loan can be anywhere from 3.5 percent to 20 percent; which can be a significant amount of money that you will need to save up.

In addition to this upfront cost, there are many hidden fees in the process of purchasing a home, such as realtor fees, inspection fees, broker fees, and more. Sometimes those fees can be rolled into a larger mortgage, but that’s not always a guarantee.

As Business Insider noted on the monthly costs of homeownership, owning a home can be much more expensive than renting one.

– Continuous Responsibilities and Hidden Costs

Although owning your home may be nice, homeownership and monthly mortgage payments come with a lot of expensive and time-consuming responsibilities. As a renter, your landlord might take care of yard maintenance or important repairs that need to happen, but as a homeowner, all those hidden costs and time-consuming tasks are suddenly on your plate.

There will be near constant maintenance that you might have to contend with, depending on where you live and if you have a local Homeowners Association (HOA). Plus, anytime something breaks or needs replacing, you’ll be required to pay for it yourself — unless you have homeowners insurance to help front some of those costs.

– No Control Over Market Fluctuations

One of the biggest disadvantages to homeownership is the lack of control that you have over the market and your home’s overall value. Your home can be the best one on the block, but, if you’re living in a stagnant market, it might be difficult to sell your home at a profit. Recessions, market crashes, or lack of interested buyers can all cause you to lose money on your investment.

Buying vs renting a home: which is better?

In the end, the option that is best for you is very dependent on your financial position, overall trends in the housing or rental market, and your own lifestyle preferences. As our nation faces a recession, it’s also especially important to research how stable the economy is in your area.

Related: Recession Danger: Metros Most & Least at Risk [+Cost of Living].

Although owning a home may be seen as a big milestone, it can also be a big expense. Conversely, renting doesn’t provide you with nearly as much long-term stability as homeownership.

Both options have their own unique advantages and disadvantages, but homeownership is certainly a valid goal worth pursuing. Whatever your goals may be, both knowing more about the pros and cons of renting or homeownership can help you make a more educated decision on how you can plan for your future.

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