Currently, in most major U.S. cities, renting is cheaper than buying on a monthly basis due to high home prices and mortgage rates, with buying often costing significantly more when factoring in taxes, insurance, maintenance, and interest. While renting offers flexibility and avoids maintenance, buying builds equity and offers stability, but requires a large upfront investment and long-term commitment; the best choice depends on your financial situation, local market, and how long you plan to stay.
Rent is more expensive than in a traditional lease.
If part of your rent payment is going towards building equity in the home (as in lease-purchase agreements), experts suggest it's perhaps more beneficial to save that money on your own—especially true when considering all the risks involved with rent-to-own contracts.
Is it cheaper to buy or rent a house? If you're purely looking at whether buying or renting is the cheapest option, then owning a home is the clear long-term winner in terms of cost, assuming you're able to afford to buy a property.
To afford $1,500 rent, you generally need a gross monthly income of $5,000 (based on the 30% rule) or $4,500 (using the 3x income rule), translating to an annual salary of around $60,000 or $54,000, respectively; however, consider your debts and other expenses, as you might need more income, especially in high-cost areas.
The report, based upon a survey of 2,000 renters, found that 72% of Gen Z renters view renting as a smarter choice and better financial approach than homeownership. With that in mind, rental housing operators would be wise to cater efforts toward this subset, which largely views renting as more than a temporary option.
To afford $2,500 in rent, you generally need an annual gross income of around $100,000, based on the common "30% rule" (rent ≤ 30% of gross income) or the "40x rule" (annual income ≥ 40x monthly rent), though some suggest a higher income might be needed depending on other debts and savings goals. A salary of $100,000 ($8,333/month) allows for roughly $2,500 in rent, leaving enough for other expenses and savings.
Rent-to-own (RTO) agreements benefit buyers who need time to improve credit or save for a down payment while locking in a future purchase price, and they benefit sellers by providing steady rental income, a committed buyer, and potentially saving on commissions. Buyers get a chance to "test drive" the home, while sellers avoid vacant properties and find a motivated renter-buyer, though the contract terms heavily influence who benefits most.
The benefits of owning a home instead of renting offer buyers several tax advantages, the ability to grow equity, and of course a place to call your own. It's also a feel-good milestone that offers a sense of pride and accomplishment.
To afford $3,000 in rent, you generally need a gross annual income of $120,000, based on the common 30% rule (spending 30% of gross income on rent) or the landlord's 40x rule (annual income 40 times monthly rent). This means you'd need roughly $10,000 in monthly gross income ($3,000 / 0.30) to comfortably meet this housing cost, though some suggest a higher income for greater comfort.
If you're looking at an apartment that costs $1,500 per month in rent, according to the 3x rule, you would need a gross monthly income of at least $4,500 (1500 x 3) to be considered a suitable tenant.
You generally need a credit score of at least 620 to qualify for a conventional mortgage, though every lender is different. FHA loans, which are backed by the federal government, may be an option for individuals with credit scores as low as 500.
For a $400,000 house, your down payment can range from $0 to $80,000, depending on the loan type and your financial situation, with 3.5% ($14,000) for FHA loans, 3% ($12,000) for conventional loans for some first-timers, or 20% ($80,000) to avoid Private Mortgage Insurance (PMI) on conventional loans, while VA and USDA loans can offer 0% down for eligible buyers.
As soon as you realize you won't be able to pay your rent, consider reaching out for help. You could talk to a housing counselor, apply to rent assistance programs, and even ask your landlord for ideas.
Gross income is the amount of money you earn before taxes and other things, like insurance premiums or retirement savings, are withheld. Here's an example: Say you earn $4,000 per month before taxes. Using the 30% rule, you should try to spend $1,200 or less per month on rent. Apartment List.
By age group
Younger adults rent more: among ages 18–29, 45% rent versus 25% owning; ages 30–44, 36% rent versus 58% owning.
Yes, you can refuse a rent increase, but it usually means you'll have to move out, as landlords can choose not to renew your lease or accept the old rent, potentially leading to eviction if you don't pay the new rate. Your options are to negotiate, accept the increase, or refuse and move, with legal protections like rent control or proper notice periods varying by location.
For many wealthy households, renting is less about cost and more about flexibility, lifestyle, and keeping money stashed in other investments. Renting luxury properties lets millionaires avoid ownership burdens like maintenance, high transaction costs, and market timing risks.