While many people aspire to homeownership, it’s not the right choice for everyone. Renting instead of buying offers flexibility, limits maintenance obligations, costs less upfront, and allows you to move more easily. Deciding to rent or buy your home depends on your goals, priorities, and desired lifestyle. Here are some of the advantages and disadvantages of renting a home.
Key Takeaways:
- Renting can be a good option for those who want a more flexible lifestyle and don’t want the responsibility of owning and maintaining a home.
- However, renting means you’ll miss the opportunity to build equity with each mortgage payment.
- Renters also need permission to make changes to the home or to keep pets.
Pros of Renting a House
Renting your home instead of buying one can streamline your housing expenses and keep your options open for moving on.
Cheaper upfront costs
To buy a home, you typically need a down payment of at least 3% of the purchase price. On a $400,000 house, that’s $12,000. To avoid private mortgage insurance, you’ll need a 20% down payment — $80,000 on a $400,000 home. You also have to pay closing costs, which you can expect to cost 2% to 5% of the purchase price. That’s an additional $8,000 to $20,000 that you’ll need to pay upfront.
The upfront costs of renting are much lower. You might only need to pay an application fee, make a security deposit, and cover some additional costs — like a pet deposit. You won’t need thousands of dollars for a down payment and closing costs, and you can get your deposits back if you leave the home in good condition.
It’s easy to move out
Another perk of renting is it’s much easier to move out. Once your lease is up, you can renew your rental agreement or move out. Some landlords let you convert your lease into a month-to-month agreement when it expires.
Homeowners can’t move that quickly. If a homeowner wants to move, they have to sell their home or rent it out. It takes an average of three to five days to list a home for sale, 65 days to get an offer, and then 50 days to close the deal, according to the National Association of Realtors. That’s roughly four months — possibly longer, depending on market conditions.
You don’t pay for repairs and maintenance
When you rent a home, your landlord pays for repairs and routine maintenance. If something goes wrong, you just call your landlord, and it’s their responsibility to fix it. Homeowners, however, have to pay for their own maintenance and repairs. As a general rule, some financial experts recommend setting aside 1% to 2% of the purchase price each year for home maintenance.
No property taxes
Homeowners pay property taxes to local and state governments, funding services like schools, public safety, and infrastructure. Property taxes are determined by your home’s value and the local tax rate, and are paid semiannually or quarterly. As a renter, you don’t have to worry about property tax payments — those are up to the property owner.
Cons of Renting a House
Renting a house also has disadvantages compared with owning one.
You aren’t building home equity
One of the biggest downsides of renting is you’re not building home equity. Homeowners build equity with each mortgage payment they make — and when the value of their home increases. Homeowners can borrow their equity using a home equity loan, a home equity line of credit, or a cash-out refinance to pay for renovations, college tuition, debt consolidation, or other needs. And when they sell, the equity is the amount they keep after paying off their mortgage lender. Renting keeps a roof over your head, but your monthly rent payment builds wealth for your landlord — not you.
You need permission to make changes
When you own your home, it’s yours — you can paint it any color you like, customize it to your tastes, and make any changes you wish. Renters can’t make those kinds of changes without permission from the landlord.
Your rent can go up — way up
Even if you don’t move, your rent can go up. The average asking rent increased 3.2% between October 2022 and October 2023, according to Zillow. And it can increase a lot more than that, depending on the market. In the 12 months ending February 2022, the average monthly rent in the U.S. increased by about 15%, according to Redfin. Homeowners don’t have to worry about such increases, especially with a fixed-rate mortgage that locks in your monthly payment for as long as you have the loan.
You could be forced to move or evicted
One of the risks of not owning your home is that your landlord could decide to no longer rent out the property, and you’d have to move. And if you fail to pay your rent or violate the lease agreement in some other way, your landlord could legally evict you.
Pets may not be allowed
If you have pets, you may have difficulty finding a rental. Some property managers limit the type and number of pets tenants can keep — and some allow no pets. Even if you don’t have a pet right now, you should still know your landlord’s policy in case you want one later.
Pros vs. Cons of Renting a Home
Here’s a chart to help you weigh the advantages and disadvantages of renting a house instead of buying one.
Pros and Cons of Renting a House
| Pros | Cons |
| Cheaper upfront costs. | You aren’t building equity. |
| It’s easy to move out. | You need permission to make changes. |
| You don’t pay for maintenance and repairs. | Your rent can go up — way up. |
| You don’t pay property taxes. | You could be forced to move or evicted. |
| Pets may not be allowed. |
FAQ
Here are answers to some frequently asked questions about renting a home.
Buying a home can be a great investment because you build equity with each mortgage payment. Buying also comes with higher upfront costs and more responsibility. Renting has lower upfront costs and allows you to move easily, but you won’t be building equity.
If you change jobs and need to move before your lease ends, your landlord or property manager will typically let you break your lease if you pay a penalty. This fee is typically two months of rent.
Landlords can only enter your apartment for specific reasons, such as they’re responding to an emergency or if you’ve given permission.
The Bottom Line on the Pros and Cons of Renting a Home
Renting a home can be right for someone who likes or needs to move often. Renters don’t have to worry about property taxes, repairs, or maintenance — but that also means you have less control over your home. Renting has much lower upfront costs but doesn’t build equity. It’s important to weigh the advantages of renting versus buying to make the decision that’s best for you and your lifestyle.
