Should I Rent or Buy a Home? A No-Nonsense Guide for Parents
Photo by Ronnie George
At some point, every parent wrestles with the question: Should we rent or buy a home?
It might hit after yet another rent increase, or when your kids start begging for a backyard.
Maybe it happens when you realize you’ve spent thousands on rent and have nothing to show for it.
Or perhaps a well-meaning family member reminds you that when they were your age, they already owned a house.
Buying a home has long been seen as the responsible, wealth-building move. Renting, on the other hand, often gets labeled as throwing money away.
But in today’s economy—with high home prices, rising interest rates, and the general unpredictability of life as a working parent—the answer isn’t as simple as it used to be.
So let’s break it down.
This isn’t just a rent vs. buy calculator result.
It’s a deep dive into what actually makes sense for parents who want stability but also need flexibility, who want to build wealth but don’t want to be trapped in a financial sinkhole.
We’ll talk about the numbers, the hidden costs, the emotional factors, and the creative ways families are making homeownership work—even when the traditional path feels impossible.
When Renting Might Be the Smarter Financial Move
A lot of people assume that if a mortgage payment is equal to or less than what they pay in rent, buying is the obvious choice.
But that’s like deciding whether to have a second kid based only on the cost of daycare.
It’s only part of the picture.
The total cost of homeownership goes far beyond a mortgage payment. To name a few…
Property Taxes
These vary significantly by state but typically range between 0.5% and 3% of a home's value per year.
For example, in New Jersey, the average property tax bill is around $11,445 per year, while in Hawaii, it's closer to $1,420 per year.
Property taxes can increase annually, depending on local government policies.
Homeowners Insurance
Costs depend on location and home value, but the national average is $1,950 per year.
If you live in an area prone to natural disasters, expect to pay much more—homeowners in Florida often pay over $8,000 per year.
Maintenance Costs
Experts recommend budgeting 1-2% of a home's value per year for repairs and upkeep.
That means on a $400,000 home, homeowners should set aside between $4,000 and $8,000 annually for expenses like roof repairs, plumbing issues, and HVAC maintenance.
Unexpected Expenses
These are the hidden costs of homeownership that can catch new buyers off guard.
Major appliance breakdowns, emergency repairs, or structural issues can quickly add up.
A new HVAC system, for example, can cost anywhere from $5,000 to $12,000, while a new roof might run between $8,000 and $15,000.
Unlike renting, homeowners bear full financial responsibility for these costs.
Renting, on the other hand, often provides more financial flexibility.
You don’t have to worry about major repairs, you can move more easily, and in some markets, renting actually allows you to save and invest more over time.
Renting Can Actually Build Wealth—If You Invest the Difference
One of the biggest arguments for homeownership is that it allows you to build equity instead of paying someone else’s mortgage.
But what if you could invest your money elsewhere and get a better return?
Historically, real estate appreciates at an average of three to five percent per year, depending on location.
The stock market, on the other hand, has returned an average of seven to ten percent annually over the long term.
If renting allows you to invest more in retirement accounts, index funds, or even a business, it can actually be the better wealth-building strategy.
A Quick Example: Renting vs. Buying
Let’s say you’re currently renting a two-bedroom apartment for $2,500 per month.
You’re considering buying a $400,000 home with a 20% down payment, which means you’ll be financing $320,000. With a 7% interest rate on a 30-year fixed mortgage, your monthly mortgage payment (including principal and interest) would be around $2,130.
Add in property taxes, homeowners insurance, and maintenance costs, and your total monthly housing cost could easily reach $3,000.
Now, if you continued renting at $2,500 per month and invested the difference of $500 per month into an S&P 500 index fund with an average annual return of 8%, after 10 years, your investment could grow to approximately $92,000.
In contrast, if your home appreciates at 3% per year, its value would be around $537,000 after 10 years, but you would still owe a significant portion of your mortgage balance.
You should also consider what would happen if, instead of using the 20% down payment for a home, you invested that money instead. In this case, with a $400,000 home, your down payment would be $80,000.
If you took that $80,000 and invested it in an S&P 500 index fund averaging an 8% annual return, after 10 years, your investment could grow to approximately $172,000. This is on top of the $500 per month you’d be investing from the rent vs. mortgage cost difference.
Total Investment vs. Homeownership Wealth Comparison
Let’s take a moment and recap the numbers a bit more. In 10 years…
If you bought a home: Your home value may increase to $537,000 (assuming 3% annual appreciation), but you still owe a large portion of your mortgage.
If you rented and invested: Your $80,000 down payment + $500 per month investment could grow to over $260,000, depending on market performance.
This example highlights why investing the difference while renting can sometimes outperform homeownership as a wealth-building strategy, particularly in high-cost markets where home appreciation is slower than stock market returns.
The key is discipline.
If you’re renting but spending all your extra cash instead of investing, you’re not getting the financial benefits of homeownership or investing.
But if you can rent while putting money into higher-return investments, you might come out ahead—especially in high-cost housing markets where buying is prohibitively expensive.
When Renting Makes More Sense
Renting might be the better option if:
You don’t have at least 5-10% of a home’s purchase price saved for a down payment and closing costs.
Your local market has significantly overpriced homes compared to rental costs.
You expect to move within the next 5 years.
You prefer not to deal with maintenance, repairs, and the responsibilities of homeownership.
You want to keep your financial options open for other investments or life changes.
Now that we covered renting, let’s take a few minutes to make the case for buying a home.
Why Buying a Home Might Be the Better Choice
While renting has its advantages, there are many reasons why buying a home can be a smart financial and lifestyle decision—especially for parents looking for stability, wealth-building opportunities, and long-term security.
Building Long-Term Wealth Through Equity
One of the biggest advantages of homeownership is the ability to build equity over time.
Instead of making rent payments that go directly into your landlord’s pocket, a mortgage payment allows you to gradually own more of your home.
Over time, as you pay down the principal and property values appreciate, you accumulate wealth that you can later tap into through selling, refinancing, or home equity loans.
More Predictable Monthly Costs
Unlike renting, where landlords can increase rent annually (sometimes significantly), buying a home provides more stability in housing costs.
With a fixed-rate mortgage, your monthly principal and interest payments remain consistent, making it easier to budget for the long term.
While property taxes and insurance may rise slightly over time, homeownership provides a level of predictability that renting does not.
Most people will lock in a 30-year fixed mortgage, but that isn’t the only option. If you can afford the higher monthly payments, check out a 20-year or 15-year mortgage. They typically come with lower rates and will cut your longterm interest bill drastically.
Using the above example for a $400,000 home with a 20% down payment ($80,000) and $320,000 loan amount, here's how the total interest paid compares between a 30-year mortgage at 7% interest and a 15-year mortgage at 6.5% interest:
30-year mortgage (7% interest): Total interest paid over the life of the loan = $446,428
15-year mortgage (6.5% interest): Total interest paid over the life of the loan = $181,758
Interest savings with a 15-year loan: $264,671
By choosing a 15-year mortgage instead of a 30-year mortgage, you would save over $264,000 in interest payments.
Tax Benefits for Homeowners
One of the biggest financial perks of homeownership is the tax advantages that come with it.
While renters don’t receive tax benefits beyond standard deductions, homeowners can take advantage of several tax breaks that can lower their overall tax bill and improve long-term financial standing.
Mortgage Interest Deduction
One of the most significant tax benefits is the mortgage interest deduction.
If you have a mortgage on your primary residence, you can deduct the interest paid on loans up to $750,000 (or $375,000 if married filing separately).
For homeowners in the early years of their mortgage, this deduction can result in substantial savings since a significant portion of monthly payments goes toward interest.
For example, if you have a $320,000 mortgage at 7% interest, you could be paying over $22,000 in mortgage interest in the first year alone.
Being able to deduct that amount from your taxable income can result in thousands of dollars in tax savings, depending on your tax bracket.
Capital Gains Exclusion
If you sell your primary residence after living in it for at least two out of the last five years, you can exclude up to $250,000 in capital gains ($500,000 for married couples filing jointly) from federal taxes.
This means if your home appreciates significantly, you could sell it and keep those profits tax-free, making homeownership one of the most powerful wealth-building tools available.
For example, if you bought a home for $400,000 and sell it ten years later for $550,000, you may not owe any taxes on the $150,000 profit if you qualify for the exemption.
Home Office Deduction (For Self-Employed Homeowners)
If you run a business from home or work remotely and have a dedicated home office space, you may qualify for the home office deduction.
This allows you to deduct a percentage of your home expenses, including mortgage interest, utilities, and maintenance, based on the square footage of your office space.
This can be a valuable deduction for freelancers, entrepreneurs, and remote workers who own their homes.
Energy-Efficient Home Tax Credits
Homeowners who make energy-efficient upgrades—such as installing solar panels, energy-efficient windows, or home battery storage—can qualify for federal tax credits.
Under the Inflation Reduction Act, homeowners can receive up to 30% of the cost of eligible energy-efficient home improvements back in the form of tax credits.
For instance, if you spend $15,000 on solar panels, you could receive a $4,500 tax credit, reducing your tax bill dollar-for-dollar.
Ability to Borrow Against Home Equity
Unlike renters, homeowners have the ability to borrow against their home equity through a Home Equity Loan or Home Equity Line of Credit (HELOC).
These options allow homeowners to leverage their property’s value for major expenses like home improvements, education costs, or debt consolidation—often at much lower interest rates than credit cards or personal loans.
For example, if your home appreciates from $400,000 to $550,000 over time, you could borrow against that $150,000 in equity for financial flexibility. Some homeowners use this strategy to fund renovations, adding even more value to their property.
The tax advantages of homeownership can significantly reduce costs and help build long-term wealth, making it an attractive option for many families. While these benefits shouldn’t be the sole reason to buy a home, they can be a major financial advantage over renting—especially for those who plan to stay in their home for many years.
Stability for Your Family
Owning a home provides a sense of permanence that renting often does not.
For families with children, stability is especially important, as frequent moves can be disruptive to a child's education, social life, and overall sense of security.
Homeownership means that your children can grow up in the same neighborhood, attend the same schools, and build long-term friendships, creating a more stable and supportive environment.
Beyond education, homeownership fosters a sense of belonging in a community.
When you own a home, you're more likely to form relationships with neighbors, participate in local events, and invest time and effort into making your community a better place.
This level of community engagement is often harder to achieve when renting, as leases are typically shorter-term, and frequent moves can make it difficult to establish roots.
Another important factor to consider is the financial predictability that comes with homeownership.
Unlike renting, where landlords can increase rent or decide to sell the property at any time, owning a home with a fixed-rate mortgage provides consistency.
Parents don’t have to worry about unexpected displacement or rent hikes that could impact their budgeting and financial planning. This stability can relieve a significant amount of stress and allow families to focus on their long-term goals without the uncertainty of rising rental costs.
Furthermore, homeownership allows families to personalize their living space according to their needs.
Whether it’s designing a nursery for a new baby, setting up a backyard play area, or making modifications for accessibility, homeowners have the freedom to create a living environment that truly suits their family’s lifestyle—something that’s often restricted in rental properties.
While the financial aspects of buying a home are important, the emotional and psychological benefits of stability, security, and community should not be overlooked. For many families, these factors make homeownership a far more appealing and rewarding choice in the long run.
Hedging Against Inflation
Real estate is often seen as one of the best hedges against inflation.
As the cost of living rises, home values tend to appreciate, protecting homeowners from the impact of inflation in a way that renting does not.
Over time, purchasing a home at today's prices means that homeowners lock in their housing costs, while renters may face continuous increases in rent with little control over their long-term expenses.
For example, consider a family renting a home for $2,500 per month. If inflation causes rent prices to increase by 3% per year, in just 10 years, that same rental could cost over $3,350 per month—meaning that renters would be paying nearly $10,000 more per year compared to what they started with.
In contrast, homeowners with a fixed-rate mortgage would continue paying the same principal and interest, making their housing costs much more predictable and manageable over time.
Additionally, homeownership allows individuals to build equity in a rising market.
If inflation leads to higher wages and an increased cost of living, home prices tend to follow suit, helping homeowners grow their net worth without additional investment.
This provides financial security and the potential for increased resale value should they choose to sell in the future.
A Home Can Serve as an Investment
For those thinking long-term, buying a home can double as an investment that generates wealth beyond just providing a place to live.
Real estate has historically appreciated over time, and homeowners who strategically buy in high-growth areas can benefit from significant property value increases.
One way to maximize a home’s investment potential is by generating rental income. Some homeowners choose to rent out portions of their home—such as a basement, spare room, or accessory dwelling unit (ADU)—to help offset mortgage costs.
This extra income can be used to pay down the mortgage faster, cover maintenance expenses, or be reinvested in other wealth-building opportunities.
Another strategy is purchasing a home with the intention of eventually converting it into a rental property.
Instead of selling when upgrading to a larger home, some homeowners retain their first property and rent it out. This can create a reliable passive income stream while allowing the owner to benefit from continued property appreciation.
Additionally, homeownership provides the opportunity to leverage home equity for future investments.
As a homeowner builds equity in their property, they can access it through a home equity loan or a home equity line of credit (HELOC).
These funds can be used to invest in additional properties, renovate to increase a home’s value, or even fund other business ventures. Unlike rent, which offers no return on investment, every mortgage payment contributes to building wealth over time.
To make the most of a home as an investment, it’s crucial to do thorough research, choose locations with strong growth potential, and maintain financial flexibility to weather any downturns.
The Bottom Line: When Buying Makes Sense
Buying a home is a smart choice if:
You plan to stay in one place for at least 5-7 years.
You have sufficient savings for a down payment, closing costs, and emergency repairs.
Your mortgage, taxes, and maintenance costs are comparable to (or lower than) renting in your area.
You want the stability of homeownership and the ability to customize your living space.
You’re looking to build long-term wealth through equity and tax advantages.
While renting may be a better short-term solution in some situations, owning a home provides financial benefits and lifestyle stability that many parents find invaluable. Before making your decision, consider your long-term goals, financial situation, and the housing market in your area.
The Emotional and Lifestyle Factors That Matter Just as Much as the Math
While financial factors are a major consideration when deciding between renting and buying, lifestyle and emotional well-being play equally significant roles.
Your home is more than just an investment—it’s where you raise your children, establish routines, and build memories.
Long-Term Stability and Peace of Mind
For many families, homeownership represents security and permanence.
Knowing that you won’t have to move at the end of a lease term or worry about unexpected rent increases allows for long-term planning.
It provides a foundation for children to grow up in the same neighborhood, build lasting friendships, and attend the same schools without disruption.
Stability can reduce stress and create a more predictable environment for both parents and children.
Lifestyle Considerations and Personal Preferences
Beyond financial calculations, your lifestyle plays a crucial role in deciding whether to rent or buy.
Do you prefer the flexibility to relocate for work or new opportunities?
Renting allows you to move without the burden of selling a home.
Are you someone who values personalizing your space?
Homeownership gives you the freedom to renovate, paint, and create a space that reflects your personal taste—something that most rental agreements prohibit.
Additionally, homeownership often fosters a sense of community.
When you own a home, you’re more likely to engage with neighbors, join local events, and feel a greater sense of belonging in your neighborhood.
Renters, especially those in short-term leases, may not develop the same level of connection to their community.
The Trade-Off Between Convenience and Responsibility
Owning a home comes with responsibilities that renters simply don’t have to worry about.
If the roof leaks or the furnace stops working, it’s on you to fix it—both financially and logistically.
This can add stress, particularly for parents with already full schedules.
Renters, on the other hand, have the convenience of relying on landlords for maintenance and repairs.
On the flip side, homeowners have full control over their space and are not at the mercy of a landlord’s decisions. They don’t have to worry about sudden lease terminations, pet restrictions, or renovation decisions that are out of their control.
Emotional and Psychological Benefits of Homeownership
The sense of permanence, pride in ownership, and ability to build generational wealth contribute to overall happiness.
Owning a home can also foster a greater sense of responsibility and long-term financial discipline, as it requires budgeting for maintenance, property taxes, and other expenses.
However, this isn’t to say that renting is inherently stressful or dissatisfying.
For many, the reduced financial and maintenance burdens of renting allow for a more flexible, carefree lifestyle.
The key is finding a housing situation that aligns with your personal and family priorities.
Creative Ways to Make Homeownership More Affordable
Between ever rising costs (due to low supply and high demand) and a higher than we’re used to average interest rate, it feels nearly impossible to buy a home.
For those who want to buy but feel priced out, there are alternative paths to homeownership.
House Hacking: Turning Your Home Into an Income Source
One of the most effective ways to make homeownership more affordable is through house hacking—purchasing a multi-unit property and renting out one or more units while living in one yourself.
This can significantly offset your mortgage costs and even allow you to live for free if rental income covers your payments.
Another approach is renting out a basement apartment, an in-law suite, or even a garage-converted studio to generate additional income.
Co-Buying with Family or Friends
Some families and close friends are pooling their resources to buy homes together.
Co-buying allows multiple parties to share the financial burden of a down payment, mortgage payments, and maintenance costs.
However, it’s crucial to have a clear legal agreement in place that outlines ownership percentages, responsibilities, and exit strategies to avoid complications later.
Exploring First-Time Homebuyer Programs and Grants
There are many government and nonprofit programs designed to help first-time homebuyers get into the market with lower down payments and reduced interest rates.
Programs such as FHA loans (requiring as little as 3.5% down), VA loans for veterans, and USDA loans for rural properties can make homeownership far more accessible.
Additionally, many states and local governments offer grants or down payment assistance programs that can help cover upfront costs.
Buying in an Emerging Market
Rather than purchasing in a high-cost city, some buyers are looking to emerging markets where housing is more affordable.
Many suburban and smaller metro areas still offer good job opportunities with significantly lower home prices.
Remote work has made it easier for many families to consider areas where they can get more house for their money.
Considering a Fixer-Upper
If you’re open to some sweat equity, buying a fixer-upper can be a great way to save money.
Homes that need cosmetic updates or minor renovations often sell for less than move-in-ready properties.
With strategic improvements, you can increase your home's value over time while keeping upfront costs lower.
Leasing with an Option to Buy
Rent-to-own agreements allow potential homeowners to rent a home for a period while part of their rent payments contribute to the down payment.
This strategy can be beneficial for those who need time to save or improve their credit before securing a mortgage.
Reducing Mortgage Costs with a Shorter-Term Loan or Interest Rate Buydown
While 30-year mortgages are standard, a 15- or 20-year mortgage can come with lower interest rates, helping homeowners save on long-term interest costs.
Some lenders also offer interest rate buydown options, where you can pay upfront points to lower your mortgage rate over the life of the loan.
The Bottom Line
The rent vs. buy decision isn’t about what your parents did or what a mortgage lender says you can afford.
It’s about what makes sense for your financial goals, lifestyle, and long-term plans.
If stability and building equity are your priorities, and you plan to stay in one place for the long term, buying can be a smart move.
But if you value flexibility, want to invest your money elsewhere, or live in an expensive housing market, renting might be the better choice.
Whatever you decide, the most important thing is making an informed decision—one that sets your family up for financial success rather than unnecessary stress.
