Is It Better to Rent or Buy a Home?

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Is It Better to Rent or Buy a Home?

Who doesn't dream about having their own home? However, when the time comes to make a decision, it can be really challenging and confusing for many people.

Rent or buy? What to choose?

Renting or buying can have a major effect on your financial health, objectives, and lifestyle - so it's smart to carefully consider all your options before making a choice. Both require a consistent income and effort to sustain, so think carefully before you commit.


Let’s examine the pros and cons of renting.

What Are The Advantages of Renting?

  • When renting you can move as soon as your lease is up, allowing a lot of mobility.
  • You don't need to worry about managing the property. No mowing the lawn, no fixing things on your own, and no exterior building upkeep. These responsibilities usually fall on the property owner.
  • You don’t have to pay property taxes. You will only have to pay your rent payment.
  • You don't have to worry about finding good homeowners insurance or even paying it.
  • If your essential appliances are outdated to the point of inadequacy you may get a free upgrade.

What Are The Disadvantages of Renting?

  • You won’t be able to make many modifications to your living space. Want to renovate your home? Some rentals won't even let you nail decorations to the walls.
  • There may be restrictions on pets. Some types of pets may flat-out be forbidden. You may have to pay pet fees for others.
  • Your rent can be raised by any amount at any time. If you don't like it you'll have to leave.
  • Your monthly payment heavily depends on the health of the housing market. If the economy is not doing well neither will your wallet.
  • You don’t get the feeling of pride and accomplishment of owning your own house.

What Assistance Can I Get When Renting?

The Department of Housing and Urban Development (HUD) can provide assistance with the Section 8 Housing Choice Voucher program. Section 8 allows Public Housing Authorities (PHAs) to cover most or in some cases all of your rent for select housing units.

The amount PHAs cover is based on Payment Standards which are closely tied to Fair Market Rents.

Do I Qualify For Section 8?

To qualify for the Housing Choice Voucher program you must meet certain income requirements. PHAs must provide 75% of their vouchers to applicants in the Extremely Low-Income category (within 30% of an area's median income). Some of a PHA's vouchers may go to those within the Very Low-Income category (within 50% of an area's median income).

See what the Income Limits are in your area.

Find a PHA near you.

Tips for Finding the Perfect Rental Property

  • Determine your budget.
  • Start your search early and use online resources to find properties.
  • Consider the neighborhood and location.
  • Determine your must-have features and amenities.
  • Understand your rights and responsibilities as a tenant.
  • Visit the property before signing the lease.
  • Check the condition of the property and appliances.
  • Check the lease agreement carefully before signing.
  • Ask questions and clarify doubts with the landlord or property manager.


Let’s explore the advantages and disadvantages of buying a property.

What Are The Advantages of Buying a Home?

  • You have the freedom to alter your house in many ways.
  • You can own any type of legal pet.
  • Interest on mortgage payments may be tax deductible, unlike rent interest.
  • You usually get a larger property size.
  • You can choose what appliances you want.
  • You may be able to find a mortgage to fit your budget and goals.
  • Mortgage payments are usually less expensive than rent payments for similar properties.
  • No matter what happens to the market your payments will remain the same.
  • You get all of the pride and joy associated with owning your own house.

What Are The Disadvantages of Buying a Home?

  • Down payments can be costly.
  • You have to do all of the work and maintenance on your own.
  • You have to get homeowners insurance.
  • You will have to pay property taxes.
  • Most of the time, you will have to buy furniture and appliances on your own.
  • You will have a hard time moving. In order to move you will need to find someone to buy or rent your home.
  • Other expenses that homeowners need to pay are trash pickup, swimming pool upkeep (if you have one), pest control, sewer & water
  • services, and tree trimming.
  • In some areas, you will also need to pay earthquake and flood insurance.

What Assistance Can I Get When Buying A Home?

When it comes to buying a home, there are different types of loans that can help you customize a payment plan to match your goals and level of income. The three primary types of assistance loans used when setting up a mortgage are:

  • FHA Loans - Federal Housing Administration Loans - 3.5% down
  • VA Loans - Veterans Affairs Loans- 0% down
  • USDA Loans - United States Department of Agriculture Loans - 0% down

FHA Loan Requirements

There are five categories of FHA loans: traditional mortgage, Section 245(a) loan, home equity conversion mortgage, energy-efficient mortgage, and 203(k) mortgage.

The history of respecting debts and having sufficient income are other requirements, so be prepared to provide evidence of both. Lenders will also ask for:

  • Steady employment history (2yrs)
  • Social Security Number
  • Down-Payment (minimum 3.5%)
  • Owner-Occupied Residence (must live in the property you took out the loan for)
  • FHA-approved property appraisal
  • Front-End Ratio (mortgage + fees + taxes + insurance must all be lower than 31% of gross income; 40% may be approved with justification)
  • Back-End Ratio (mortgage + all loans and payments must be lower than 43% of gross income; 50% is rarely approved)
  • A minimum credit score of 580 with a minimum down payment of 3.5% or 500-579 with a minimum down payment of 10%
  • Two years out of bankruptcy
  • Three years out of a foreclosure
  • The loan must be within the set Loan Limit for your area

Learn more about conventional mortgages vs. FHA loans

VA Loan Requirements

The U.S. Department of Veterans Affairs offers a mortgage program for military veterans. These loans are not backed by the government, but rather by its agency, which makes lenders confident in offering loans as they pose fewer risks than conventional mortgages.

Here are the program's requirements (at least one):

  • You have served 90 consecutive days of active service during wartime
  • You have served 181 days of active service during peacetime
  • You have 6 years of service in the National Guard or Reserves
  • You are the spouse of a service member who has died in service
  • You are the spouse of a service member who has died due to a service-related disability or injury

USDA Loan Requirements

This is a loan program offered by the U.S. Department of Agriculture (USDA) Rural Development, and its criteria mainly revolve around the borrower's home address, credit history, intended real estate usage, and income. In detail, the requirements are:

  • Must have very low to moderate income
  • The home must be in a rural area (population under 35,000)
  • U.S citizen or permanent resident
  • Must maintain an escrow account with your lender

Remember that lenders may have their own internal criteria and guidelines in addition to the requirements set by the USDA.

Tips for Finding the Perfect Property for Buying

  • Determine your budget.
  • Decide on the type of property you want (e.g. house, apartment, townhouse).
  • Choose a location that fits your lifestyle and needs.
  • Consider the neighborhood's safety, accessibility, and amenities.
  • Work with a reputable real estate agent to help you find suitable properties.
  • Do your research on the property's history, such as ownership, previous sales, and any legal issues.
  • Have a property inspection done before making an offer to ensure that it’s in good condition.
  • Negotiate with the seller to get the best price possible.
  • Secure financing before making an offer to make the process smoother and faster.
  • Don't rush into making a decision, take your time and make sure the property meets all your requirements.

Should You Rent or Buy a House?

Buying a home is the biggest purchase most people will ever make. It’s important to make sure you are financially ready for such a large commitment. Buying a home is not the best idea for everyone at every stage of life. Renting has its place too.

If you:

  • have a good amount of savings
  • have stable income
  • want to stay in your area for more than two years
  • have a good credit score
  • have money to put aside every month
  • can save up for a down payment + closing costs
  • Then buying a house may be right for you.

    If you:

  • don’t have a stable income
  • value mobility
  • don’t want to make a big commitment
  • don’t want to take care of your own property
  • have a poor credit score
  • are trying to save up for a down payment
  • Then renting looks like your best bet.

    Alan Reed

    Alan Reed

    Alan is a real estate investor based in Northeast Pennsylvania with experience renovating and operating everything from single-family rentals to strip malls and storage facilities.

    June 23, 2022 (Updated April 22, 2024)