Should you rent or buy a house?

Determines what makes the most financial sense for your situation.

There are many factors to consider when deciding between renting vs. buying a home. Both options come with their fair share of financial implications so it’s important to understand the pros and cons of renting vs. buying a house prior to making a commitment.

Renting a home often provides more upfront flexibility with your finances, however, you will miss out on making a long-term investment. Buying a home allows you to build equity and reap tax benefits, but owning also comes with more financial responsibility and a greater upfront investment.

Here are the biggest pros and cons for renting vs. buying a home.

Renting pros
 

  • Smaller, one-time deposit
     

  • Limited financial liability
     

  • No property taxes
     

  • Fewer unexpected costs
     

  • Shorter-term commitment

Buying pros
 

  • Initial down payment goes toward home value
     

  • Money paid builds equity
     

  • Homeowners receive tax deductions and credits
     

  • Upgrade your home how you'd like
     

  • Potential for increased financial security
     

  • Consistent monthly payments

Renting cons
 

  • Unexpected rent increases
     

  • Payments never stop
     

  • No long-term financial investment opportunity
     

  • More restrictions

Buying cons
 

  • Increased financial responsibility
     

  • Larger, immediate investment
     

  • Potential instability in the housing market
     

  • Selling your home can be costly
     

  • Less flexibility when it comes time to move
     

  • Property taxes are costly and fluctuate

Application fee

Security deposit

First and last month's rent

Pet deposit

Down payment

Closing costs

Agent commission

Inspection fee

Warranty

Rent

Renter's insurance

Amenities fee

Monthly pet fee

Property taxes

Insurance

Homeowners insurance

Mortgage

Private mortgage insurance*

HOA fees (if applicable)

Home maintenance, repairs

*Only required if down payment is less than 20% or until homeowner has more than 20% of equity in their home.

Rent vs. Buy calculator

Our Rent vs. Buy calculator can help you weed through the fees, taxes and monthly payments to help you make a decision between these two options.

Calculator

Discuss renting vs. homeownership with an Ameriprise financial advisor

If you are deciding between renting and buying a home, know that an Ameriprise financial advisor can help you asses your current financial situation and determine which move may align with your financial goals.

Related information

Home loans

Financial steps to buying a home

Downsizing your home in retirement

An Ameriprise financial advisor can help you navigate the options available when considering renting or buying a home.

Or, request an appointment online to speak with an advisor.

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At Ameriprise, the financial advice we give each of our clients is personalized, based on your goals and no one else's. 

If you know someone who could benefit from a conversation, please refer me.

Background and qualification information is available at FINRA's BrokerCheck website.

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Ameriprise Financial cannot guarantee future financial results.
Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.
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