{"id":118268,"date":"2021-11-10T01:57:09","date_gmt":"2021-11-10T09:57:09","guid":{"rendered":"https:\/\/www.rentcafe.com\/blog\/?p=118268"},"modified":"2026-01-28T05:46:06","modified_gmt":"2026-01-28T13:46:06","slug":"when-does-renting-make-more-sense-than-buying","status":"publish","type":"post","link":"https:\/\/www.rentcafe.com\/blog\/renting\/when-does-renting-make-more-sense-than-buying\/","title":{"rendered":"When Does Renting Make More Sense Than Buying?"},"content":{"rendered":"

For a long time, homeownership has been the ultimate goal for a lot of Americans \u2014 and it\u2019s true that buying a home<\/a> can be a good investment if everything goes right.<\/p>\n

However, during the past decade, more and more have been waking up to the many benefits of renting. Enticed by an increasing selection of high-quality rental properties and the prospect of carefree, zero-maintenance tenancy, a growing number of lifestyle renters<\/a> are opting out of homeownership and into permanent renting.<\/p>\n

The culture and the economy are evolving to meet their needs too, as the number of rental units under construction is nearing its highest levels<\/a> in three decades, and renters can now use their rent payment history to establish credit<\/a>. At this point, there are a lot of instances where renting a place makes more sense than buying. Let\u2019s look at some of them, and explain why this is the case.<\/p>\n

The Numbers Don\u2019t Work<\/h2>\n

\"buying<\/p>\n

Homeownership is such a powerful wealth builder because you\u2019re building equity while your home value is (presumably) going steadily upwards.<\/p>\n

But buying isn\u2019t always the better choice when it comes to renting vs. buying<\/a>. A general metric that many experts suggest using is the buy-to-rent ratio. Take the rent you\u2019d be paying, and multiply it by 12, which is what you\u2019d pay in rent in a year.<\/p>\n

Next, take the purchase price of a prospective home and divide it by the annual rent number you calculated above. If the result is more than 20, renting makes more financial sense; if the result is less than 20, buying is the more prudent move.<\/p>\n

You\u2019re Unfamiliar with the Area<\/h2>\n

Every neighborhood has its own character, and if you\u2019re new in town, you probably won\u2019t know what the best fit for you is going to be.<\/p>\n

You can ask for recommendations, and research things such as amenities, transportation, and school quality, but that\u2019s no guarantee the area\u2019s vibe will match what you\u2019re looking for. Homeownership is a long-term commitment, so you don\u2019t want to leap into a hasty decision. Make a list of potential neighborhoods to settle in, rent for a year in each of them, and only start looking to buy once you\u2019ve found that perfect match.<\/p>\n

You Don\u2019t Have Time for Maintenance<\/h2>\n

\"home<\/p>\n

Owning a home is a lot of work. As the owner, you\u2019re responsible for everything from trimming your lawn and trees to small repairs and standard maintenance such as painting and cleaning the gutters. That work not only beautifies your home (and keeps your neighbors happy) but also preserves the value of your property. All in all, it takes a lot of hours and elbow grease.<\/p>\n

If you don\u2019t have the time or willingness to look after your home, it\u2019s probably a good idea to rent, and leave the maintenance to the landlord and the property manager.<\/p>\n

You Can\u2019t Afford to Buy in Your Ideal Location<\/h2>\n

Many buyers ultimately have to choose between where they\u2019d prefer to buy and where they can afford to buy. These buyers aren\u2019t necessarily doomed to be unhappy; many end up thriving in a neighborhood that may not have been their first \u2014 or second, or third \u2014 choice.<\/p>\n

But some buyers do end up dissatisfied. If your ideal location is one that\u2019s walkable and near amenities such as nightlife and shopping but all you can afford is a home in a suburban residential neighborhood, you may be setting yourself up for unhappiness.<\/p>\n

If your ideal location differs a lot from where you can comfortably afford to buy, you should consider renting \u2014 your lifestyle choices and happiness are too important not to.<\/p>\n

Your Credit Isn\u2019t Strong<\/h2>\n

\"renting<\/p>\n

Your credit score is a huge factor in what kind of mortgage you\u2019re approved for \u2014 or if you\u2019re approved for one at all.<\/p>\n

Lenders generally require a credit score of 620 for a conventional mortgage. That said, you could qualify for certain government-backed mortgages even if your score is in the 500s, though you\u2019ll still need to meet certain conditions to qualify.<\/p>\n

But even if you qualify for a conventional mortgage by meeting the minimum terms, that doesn\u2019t necessarily make it a good idea. If you qualify for a mortgage with less-than-ideal terms, such as a higher interest rate, you\u2019ll likely end up paying tens or even hundreds of thousands of dollars extra over the term of the loan than someone who qualified for a lower interest rate.<\/p>\n

Make sure you crunch the numbers at your interest rate to see how much you\u2019re paying in the long run and compare that to what you\u2019d pay at an ideal rate. It can often be worth it to rent for a few years while you improve your credit score \u2014 especially since, as mentioned above, you can use your rent payment history to establish credit.<\/p>\n

It\u2019s also worth noting here that a short credit history or the absence of a credit history can often hold you back as much as a poor credit history. Sometimes it\u2019s less a matter of fixing something that\u2019s broken and more one of establishing something that doesn\u2019t yet exist.<\/p>\n

You Can\u2019t Stay Long<\/h2>\n

\"renters<\/p>\n

Even if the numbers say that buying makes more economic sense than renting, there are other factors to consider than just average rent vs. prospective mortgage payment.<\/p>\n

Buying a home comes with a lot of fees and transaction costs<\/a>. Closing fees for buyers average around 3-6% of the sale price; expenses such as mortgage origination fees, broker fees, your down payment, and title insurance will add up to thousands of dollars. And then there are costs like moving fees<\/a>. When you spread those costs out over time, you\u2019ll have to stay in your new home for quite a while before you break even.<\/p>\n

How long is \u201cquite a while\u201d? Well, experts say that if you\u2019re not going to stay for longer than three years, buying is almost never a good idea. Most buyers will want to stay for at least five years before the costs become worth it.<\/p>\n

If there\u2019s a chance you can\u2019t commit to staying for a half-decade, you\u2019re likely better off renting.<\/p>\n

Your Heart\u2019s Not in It<\/h2>\n

\"buying<\/p>\n

Many people look at buying a home as an investment<\/a> \u2014 but that\u2019s not all it is. Buying a home also means opting into a community and accepting that responsibility. Are you willing to hand out candy on Halloween, take part in the neighborhood block party, and clean your gutters twice a year? A lot of homeowners who see themselves as investors are taken by surprise by how much emotional labor, not to mention literal labor, they\u2019re on the hook for.<\/p>\n

A general rule is to consider how you\u2019d feel if your home\u2019s value didn\u2019t increase at all for the next decade. Would you consider it wasted time, or would you still be happy about buying? If you\u2019re only doing it for the money, you might be better off renting until you\u2019re ready to be a fully participating homeowner.<\/p>\n","protected":false},"excerpt":{"rendered":"

For a long time, homeownership has been the ultimate goal for a lot of Americans \u2014 and it\u2019s true that buying a home can be a good investment if everything goes right. However, during the past decade, more and more have been waking up to the many benefits of renting. Enticed by an increasing selection…<\/p>\n","protected":false},"author":148,"featured_media":118315,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3671],"tags":[38978],"class_list":["post-118268","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-renting","tag-useful-guides","gallery-content-unit"],"yoast_head":"\nWhen Does Buying Make More Sense than Renting? - RentCafe blog<\/title>\n<meta name=\"description\" content=\"There are a lot of instances when renting a place makes more sense than buying. 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