Renting vs. Buying a House

Pros and cons of renting a home

For many people, renting is a more realistic option than buying, especially in the early years of adulthood. Consider some of the pros and cons of renting:

Pros of renting a home

Renting is typically a good choice if you don’t plan to stay in a city or home long term, or if you don’t want to be responsible for repairs or maintenance.

Short-term housing needs

Renting is typically ideal if you’re looking to stay in a home or city temporarily. It can also make sense if you’re new to an area and want to explore before you commit to buying.

Affordable housing in desirable areas

Often, renting lets you live in an area that’s close to your work, your kids’ school or the shops and restaurants you like to visit. In high-demand areas, the upfront cost of buying can be too costly for the average family.

Low to no repair and maintenance costs

Generally, a landlord or property manager is responsible for most (or all) repairs and maintenance, though some places might require renters to be responsible for small repairs. Regardless, renters aren’t responsible for big repairs, like fixing a roof or a heating, ventilation and air conditioning (HVAC) system.

Renters insurance is less expensive

Renters insurance policies are pretty affordable compared to homeowners insurance policies. Many landlords require that tenants get renters insurance. It can be a good idea to get a renters insurance policy to cover your personal belongings in the event of theft or a disaster.

Cons of renting a home

Renting has some potential disadvantages, depending on your goals.

Payments are likely to increase over time

Rent typically increases each time you renew your lease, though not always. How much it will increase generally depends on your landlord, economic conditions and housing market trends. If you opt to not renew your lease, the next tenant will likely see an even bigger rent increase for the unit.

Not building equity

With renting, you don’t own the home, so you aren’t building equity with each payment you make. Instead, you’re paying to live in the property for a certain period of time without gaining a stake in it.

Extra fees and charges

You may have to pay extra fees for pets, maintenance or parking. You’ll also generally have to make a security deposit when you first rent a home, which is usually equal to one month’s rent.

Not tax deductible

Rent is not a tax-deductible expense, so your payments won’t lower your taxes. When you buy a house, you can typically deduct your mortgage interest on your tax return.

Payments aren’t reported

Rent payments aren’t reported to credit bureaus, so they won’t help you boost your credit score unless you sign up for a rent reporting service.

» MORE: The best (and worst) states for renters

Pros and cons of buying a home

Even if you choose to rent for a few years to save some money and decide where you want to live long term, you might have a goal of one day buying a home. Consider some of the pros and cons of buying:

Pros of buying a home

With a mortgage loan, you’ll generally know what you’re getting into in terms of payments and expectations when you close on the home.

Ownership in the property

Equity is your ownership stake in the property. Every mortgage payment you make contributes to building your equity until the loan is paid off and the home is 100% yours. Even if you sell your home before it’s paid off, you can cash out your equity and use it as a down payment on the next home.

Investment typically grows in value

Homes are considered one of the safest investments because they tend to appreciate in value over time. For instance, the median home sales price was $410,800 in the second quarter of 2025, according to the latest data from the Federal Reserve Bank of St. Louis. In comparison, the median home sales price was $322,500 in the second quarter of 2019, a 27% increase over six years.

Tax deductions available

The mortgage interest you pay each month to your lender is generally a tax-deductible expense, which means it decreases your income tax liability. There are also other tax deductions available for homeowners.

Can make changes to the home

Unlike with renting, you won’t need permission to change a paint color or swap out the carpet for hardwood floors. However, if you’re a part of a homeowners association, there may be rules concerning what changes you can make. Some work may also require a permit from a local authority.

Potential for fixed payments

If you get a fixed-rate mortgage, your monthly payments won’t change during the course of the loan, providing you with predictable monthly payments. If interest rates rise, you’ll still be locked in to your initial rate.

Payments build credit

Lenders report debt payments to the credit bureaus, so paying your mortgage on time each month can help improve your credit score.

Cons of buying a home

There are some potential downsides to consider when buying a home.

High upfront costs

If you want to buy a home, you’ll typically need to save up money for a down payment. It’s generally recommended to put down at least 20%, though most conventional lenders have a minimum requirement of 3%. Some government-sponsored home loans are available with no down payment or a low down payment.

You’ll also have to pay closing costs, which are typically equal to 2% to 5% of the home’s sale price. So, for a home that’s worth $410,800, you’ll typically pay between $8,216 and $20,540 in closing costs.

Responsibility for maintenance and repairs

Homeowners are responsible for all repairs and maintenance. So, if your HVAC system breaks or if you have a leak in your roof, you’ll need to pay to repair or replace them, which could cost thousands of dollars or more.

Additional monthly expenses

Typically, there are monthly expenses beyond your mortgage, like homeowners insurance and property taxes. You’ll also typically have to pay private mortgage insurance (PMI) if you put less than 20% down on a home.

Selling is costly and complicated

Packing up and moving isn’t as easy as it is when you rent. If you decide you want to buy a home in a different neighborhood or move to another city, you’ll have to sort out selling (or renting out) your current home. Depending on the current housing market, selling could take six months or longer.

Home value subject to market conditions

While home value tends to increase over time, there are occasional lulls in the housing market that result in dropped prices. If you need to sell your home during such a dip, you could lose money on your investment.

» MORE: Is buying a house a good investment?

Which is cheaper, renting or buying?

Mortgage and rental costs vary based on multiple factors, including location. But in general, homeownership tends to have higher overall costs than renting. Here are some of the factors that can influence whether renting or buying is cheaper:

Location

In big cities like Los Angeles, where home prices are high, it may be cheaper to rent. In a rural location where homes are more affordable, it may be better to buy.

Supply and demand

Home prices are generally influenced by supply and demand. If there aren’t many homes on the market and the demand to buy is high, both rent and home sale prices may increase.

Financial situation

Your individual financial situation can impact the cost of housing. If you have good credit and the cash available for a down payment, you’re more likely to secure a mortgage with a low interest rate, which could result in a more affordable monthly expense than a rental would offer.

FAQ

Bottom line

When comparing renting vs. buying, think about your short- and long-term housing goals and financial goals. For example, it might make sense to rent a home if you don’t plan to stay in a place long or if you don’t have the cash or credit history to qualify for a mortgage. However, homeownership builds equity, and it’s an investment in an asset that tends to increase in value over time.