rent vs buy

Making the decision between renting or buying is a significant one, not just financially but also emotionally and psychologically.

Homeownership may make sense if you intend on living in an area forever and want to build equity; however, with rising home prices and interest rates as well as limited housing inventory and inflation complicating this decision.


Making the choice to rent or buy is one of the most consequential financial decisions of your lifetime, so make sure it fits within both your finances and future plans. Conventional wisdom suggests owning makes more financial sense; however, this generalization shouldn’t limit you; your housing decision must also take into account other considerations like noise from nearby neighbors or renovation projects as well as comfort levels and tolerance levels.

Purchase of a home requires numerous upfront expenses, including purchase price, down payment, closing costs and prepayment of property taxes. Ongoing expenses also arise such as mortgage payments, maintenance and insurance premiums; however over time appreciation and rising neighborhood values may help mitigate some of these expenses.

However, if the value of homes in your area has decreased below their historical lows, purchasing may no longer be financially feasible for you. To help make an informed decision between buying or renting, enter both purchase price of house in question as well as monthly rent into Fidelity’s Rent Vs Buy Calculator to see its results.

To decide between renting and buying, it’s important to take your plan of residency into consideration. For instance, if you anticipate moving within several years it may be more cost effective to rent than purchase.

At this stage, it’s also essential to assess any savings or down payment you might have available. If using your savings as part of a down payment for purchasing a home, be sure to factor in additional upfront costs such as loan application and credit report fees as part of this calculation.

Comparing current and projected interest rates between buying and renting can also help. High interest rates can significantly raise ownership costs while more reasonable ones could make purchasing more feasible.

Down Payment

The down payment on a home is an important sum that must be saved or collected through financial partnerships to make homeownership more feasible than renting. A typical down payment could range between 20-25% of the purchase price depending on your loan terms; and it could include prepayment of property taxes and homeowners insurance premiums. Saving this sum early or finding ways for other people to contribute could make homeownership more attainable than renting.

People don’t always have the resources available to them to save an adequate downpayment, or are unable to cover monthly mortgage costs and upfront costs associated with home ownership. Therefore, taking time to assess what your budget allows is key to making an informed decision about purchasing real estate.

An important consideration for homebuying decisions should be how long you plan to reside in their new residence. Assuming you plan to remain, buying makes more financial sense as one-time buying and selling costs can be offset over time by rising property values and increased resale value.

Consider whether or not you’re prepared to accept the responsibilities of homeownership before embarking on this path. While having an interest in owning property shouldn’t necessarily be seen as negative, it is wise to examine your motivations to avoid making costly errors. If your goal of homeownership is simply driven by external pressures or because “everyone needs” it, this may be a red flag that suggests revalorising goals and understanding what really matters for yourself.

There is no single answer to the rent or buy question; rather, the decision should be a multifaceted one that considers personal lifestyle, age, work situation, desired location and your readiness to settle down for long term. Travis Credit Union’s home loan team can assist in evaluating your overall financial picture and guide through the decision process on your behalf – you can even use our Mortgage Calculator!


One key advantage of buying over renting is building equity over time and potentially reaping tax breaks when selling. But it’s important to note that these benefits largely depend on factors that don’t factor into monthly purchase prices of properties.

Real estate taxes may be significantly higher in certain areas, as are maintenance expenses such as roof repair, painting and carpet cleaning that don’t arise when renting an apartment. When making the rent vs buy calculation it is important to factor in these additional costs as part of your calculations.

Consider how long you plan to live in your new home before making any final decisions. Renting may be best suited to some, particularly if they have yet to settle on where they want to live in five or 10 years; others, however, might want to set down roots and start a family; it all comes down to personal choice and finances.

An effective way to compare the costs associated with renting and owning is using a rent-vs-buy calculator, which takes into account closing costs, property taxes, mortgage interest payments and any additional monthly expenses associated with owning your own home. There are a variety of websites offering such calculators – just make sure that when inputting information for your personal situation that all necessary numbers are entered accurately for an accurate picture.

At the same time, it’s wise to research historical trends regarding home prices and rental rates in your area. If home prices have gone up more rapidly than rents have in recent years, buying might be smarter; otherwise if rents have been consistently lower compared to home prices it may be more affordable to continue renting.