Renting vs. buying: What first-time buyers should know

One of the most important decisions you make in your life is where you sleep at night. It’s the place where you feel most comfortable, most yourself and least inhibited. But with that decision comes another major question: Should you rent or buy a home?

The answer is different for everyone, especially when you’re right on the proverbial doorstep of moving into a long-term place. Let’s go over some of the most important things you need to know before making the decision, as well as some of the questions you’ll need to ask yourself before knowing if homeownership is right for you.

What you should consider

The first, and biggest, question you should ask yourself when deciding between buying and renting is if you’re financially ready to be a homeowner. Do you have adequate savings? Do you have a credit score that would help you qualify for an optimal interest rate? Do you currently have debt obligations that could be prohibitive when purchasing a home? Some other questions you might want to ask yourself include:

• Would the home you want to buy support your short- and long-term lifestyle, or do you need the flexibility of a rental?
• Do you plan on staying in the area for a long time, or do you need to be able to pack up and leave?
• Are housing prices in your market currently fair?
• How long have you been renting, and how much has it cost you?
• Would the costs of homeownership be worth the equity you’d build?

Your answers might help you find the right direction when picking your next place.

Potential pros and cons of renting

Both renting and buying have their advantages and drawbacks. Also, your story and circumstances are different from the next person’s, so some of the pros and cons might weigh heavier than others. Here are a few to consider:

Pros

• Lower upfront costs: Renting usually means putting down a security deposit and potentially a small portion toward rent, whereas owning may require a down payment plus closing costs and more.
• More flexibility to relocate for work or lifestyle changes: You usually sign for a limited time, and you can move places based on what your life, family and career call for.
• Covered maintenance: The homeowner is typically on the hook for major maintenance and repairs, which can be costly.
• Fewer ongoing costs: Renters do not face costs like property taxes and homeowners insurance.
• No commitment: Renting makes it easier to test out a neighborhood or area before committing long-term.

Cons

• No equity building: While you still make monthly payments, you aren’t building equity the way you would with your own home.
• Rent can increase: Oftentimes landlords raise rent when you renew your lease, and there isn’t much you can do about it. Mortgage payments remain static if you have a fixed rate. 
• Less customization: Renters often have fewer options to personalize or renovate the space.
• No potential tax benefits: Renters do not get tax benefits like itemized deductions and tax credits. 
• Stability is up to the landlord: The landlord could decide not to renew the lease. They could also sell the home or bring in new tenants, leaving you looking for a new home. 

Potential pros and cons of buying

Buying also has its upsides and downsides. Here are a few you should consider before making a final decision:

Pros

• Equity building: Monthly payments may contribute to building home equity over time.
• Property appreciation: Your home’s value could appreciate over the long-term. 
• More customization: Renovate, remodel and personalize as much as you please.
• Predictable monthly payments: Fixed-rate mortgages can mean predictable monthly payments for the life of your loan. 
• Tax benefits: You may qualify for certain tax deductions and credits, but talk to a tax professional before making any major tax-based decisions.

Cons

• Higher upfront costs: Getting into your home means saving for a down payment and paying closing costs and for an inspection. That can be significantly more than a security deposit and the first and last month of rent.
• Potential property value decline: Appreciation of your home’s value isn’t guaranteed.
• Maintenance and repair costs: As the owner, you would typically be responsible for all maintenance and repair costs.
• Other ongoing costs: You may also incur costs like property taxes, insurance and HOA fees.
• Inflexibility: When you buy a home, you’re locked into it unless you can sell it, which might take time and includes added costs like agent fees.

By the numbers: A simple cost snapshot

So, you know the pros and cons of renting and buying, but let’s look at the numbers. In 2026 in Arizona, the average cost of a home is around $420,000,¹ while the average monthly cost for a three-bedroom rental is $2,108.²

With a 10% down payment, property taxes, HOA fees and other associated costs, the total cost of living in that home for the first three years is about $182,000. The total cost to rent would be about $87,000. That means you’d save roughly $95,000 by renting.

You would, however, have roughly $95,000 in equity in your home, which would be available to you if you were to sell, but you could also earn around $12,000 by investing your down payment and earning 6% each year. Simply based on costs of living, it would be worth it to buy if you expect to live in the home for 10 years or longer.

Questions to ask yourself?

At the end of the day, the big question you have to ask yourself is if buying a home is worth it to you. You can also use helpful calculators to estimate when you would break even as a homeowner based on expected cost of living. You should also have answers to questions like:

• How important to me is building equity?
• Do I plan on staying put for several years?
• Do I like the area I’m buying a home in?
• Is my work’s proximity to home important to me?
• If it’s important, is my work close to my home?
• Would I rather build equity in my home than invest what I’d otherwise use for a down payment?
• Does the home I’m looking at fit my family’s long-term outlook?
• Am I financially and personally ready to take on the obligation of a home?

Conclusion

The truth is, there’s no one right answer to what’s best. It’ll depend on your personal circumstances, your lifestyle, your goals and more. If you feel like you’re ready to be a homeowner and take on the challenge and reap the rewards, it might be a good option. If you enjoy the flexibility, lesser obligation and lower upfront costs of renting, that’s also a perfectly valid option that can even open doors to other financial possibilities, like long-term investing.

If you are ready to make the jump from renting to owning, check out our home loan resources and helpful program for first-time homebuyers. Then, book an appointment with one of our loan officers and get your homebuying journey started!