Regardless of the interest rate environment, choosing between renting and buying a home is not always clear-cut. PNC Bank’s mortgage loan professionals are here to offer guidance.

  • Along with the finances of renting vs. buying, consider how long you’ll stay, maintenance readiness, and job/income stability.
  • Start with life goals and your timeline. Renting offers flexibility; owning suits long-term roots.
  • Affordability may be area-dependent. For instance, markets with low inventory may push prices up, while others remain within reach.
  • Over time, predictable mortgage payments, potential tax deductions, and equity growth might outweigh rising rents. You may be able to refinance if rates drop.
  • Equity may become a wealth tool over time for major purchases or consolidating debt as your home’s value rises.

Years ago, when interest rates were unusually low, choosing between buying a home and renting involved a different set of variables than it does today. Although home prices were rapidly increasing, low interest rates meant lower mortgage payments — often far lower than rent for an apartment. So those who qualified for a home loan could typically save money by buying rather than renting. 

However, as interest rates increased, and home prices and inventory shifted, the buy-versus-rent equation became more complex.

First, median home values surged 29.5% between the second quarter of 2020 and the second quarter of 2025.[1] Second, today’s mortgage interest rates are around three percentage points higher than they were in 2020, increasing the cost of borrowing money.[2] Yet at the same time, according to PNC Bank Head of Home Lending Peter McCarthy, affordability for many prospective buyers remains within reach.

“A lot of would-be buyers are getting their clues from sound bites on television or what they read on social media. Instead, if you’re seriously considering making the move into home ownership, the person you should consult is a mortgage professional – someone who can review your credit score, really explore your current financial status, and make an informed recommendation.” A mortgage professional may also be able to help make home buying more affordable through identifying specialized products offering low down payment options and/or helping identify eligible grants buyers can use towards their down payment and closing costs.

Where and when does it make sense to buy versus rent? There are lots of variables to consider, both personal and financial, including your income, your location, and your credit score. Here are some factors to consider as you make your decision.

Your Lifestyle Matters

The first, essential question is less about dollars and cents, and more about life goals. Do you want to own a home? And, why?

Maybe it’s a matter of needing room for you and your family. Maybe it’s the intangibles that are important, a sense of ownership, or the desire to put down roots.

“Home ownership connects you to a place in a way that being a tenant never really can. This is especially true in neighborhoods that are close-knit. Simply put, there are times when it’s less a financial decision and more a decision of the heart,” McCarthy offers.

On the other hand, you may see relocation as a possibility in the near future to pursue an opportunity. In those situations, renting provides more flexibility when it comes time to relocate.

Or, as another consideration, a home requires care, whether it’s the yard or the weekly chores to keep a property in tip-top shape. For some, that ongoing effort is a labor of love. For others, it cuts into valuable free time they would rather spend doing other things. It's also worth noting that not everyone has the tools or skills needed to properly maintain a home on their own.

“Some prefer the convenience of making a phone call to the landlord rather than fixing it themselves or hiring a professional,” McCarthy points out. “To them, that convenience outweighs the financial considerations.”

Location Matters, Too

If you read the news, it’s easy to think that home prices are out of reach. However, affordability is very much a function of where you live.

“There are markets where supply is unusually tight at the moment,” McCarthy continues. “In those locations, many buyers are chasing relatively few properties. As a result, the Law of Supply and Demand drives home prices up in those markets. Elsewhere, there are markets where home prices remain affordable for many.”

What Affects the Numbers?

If you’re weighing the possibilities of buying a home, it helps to take a look not just at the short-term, but how the finances work over the long haul. McCarthy advises looking at your overall costs in a holistic way—and as part of an overall wealth-building strategy.

“The first question I always ask is this: What are you paying in rent? That’s your baseline. But, just as importantly, what will you be paying in rent next year? And the year after that? And the year after that? Because one thing is for certain: While a fixed mortgage rate means your [principal and interest] payment will be the same year-after-year of a 15- or 30-year term, your rent will continue to go up every time you renew your lease.”

Tax Benefits

Further, McCarthy adds, if interest rates go down, you may be able to lower your mortgage payment by refinancing. At the same time, there are other factors such as mortgage interest tax deductions that could influence your decision.[3]

“As one example, people don’t realize the tax advantages to paying a mortgage versus paying rent. If you’re purely about the numbers, make sure you’re factoring in the considerable tax deductions that come with paying mortgage interest.”

Even so, it’s important to look at the entirety of costs associated with owning a home. The expenses run the gamut from property taxes to maintenance and insurance. That’s when McCarthy offers that it is important to have an in-depth conversation with a mortgage loan professional to help answer your home-buying budget questions. You can take the first step to start this conversation by calling 1-855-744-2668.

“We constantly reinforce continuous education among our mortgage teams. That includes programs and grants that might be available to low- and moderate-income borrowers. As a result, people are very often surprised at what they can truly afford. And it’s always better to fully understand the numbers. That way, you know for sure if a home purchase makes financial sense.”

A Financial Example of Renting vs. Buying a Home

Imagine you’re deciding between buying a $300,000 home or renting a house for $1,347 per month (using realistic figures from the Houston, TX market as an example).[4,5]

In this case, your monthly rent for the first year would be $1,347, while your monthly mortgage payment, plus home maintenance, would be around $1,965. So it looks like you’re saving $618 per month by renting. But that’s only a tiny part of the picture.

Let’s see what happens when we factor in relevant financial metrics over 10 years, assuming rents rise at reasonable rates while your fixed-rate mortgage payments remain constant:

  Renting   Buying  
Down Payment or Deposit $2,694 (2 months' rent - refundable) $30,000 (10% of the purchase price)
Closing Costs $0   $12,000 (4% of the purchase price)
Insurance $1,800 ($15 per month) $20,000 ($2,000 per year)
Maintenance & repairs $0   $10,000 ($1,000 per year)
Property Taxes $0   $40,000 ($4,000 per year)
Cost to Vacate/Sell -$2,694 (deposit refunded) $18,000 (6% of the purchase price)
Income Tax Deductions  $0   -$19,560 ($1,630 per year, filing single, at 24% tax bracket)
Monthly Rent/Loan Payment $185,300 (starting at $1347 with a 3% increase each year) $204,800 ($270,000 loan at 6.5% on a 30-year fixed-rate mortgage)
Equity Built $0   -$174,00 (assuming 3% per year appreciation)
Net Cost Over 10 Years $187,100   $141,240  

When you consider income tax benefits and equity earned from buying, renting could actually cost you $45,860.

Of course, your figures will be different, based on your location and situation. Crunch your own numbers using  PNC’s rent vs. buy calculator to see how renting financially compares to buying for you.

Which Option Builds Wealth?

A mortgage payment may or may not be comparable to your monthly rent. However, what could really make the difference is the long-term effect on your overall net worth. As McCarthy notes, the difference could be profound.

“If you purchase wisely and keep your property in good shape, your home will most likely be an appreciating asset over time. That mortgage payment really goes towards increasing your wealth—not just rent going into the landlord’s pocket.”

Equity

One other factor? As a home grows in value, so does your equity – the difference between the home’s value and the balance of your mortgage. That home equity, if used properly, may become a valuable financial tool for major purchases or consolidating other forms of debt.

As McCarthy points out, “Once you’re in a home and its value rises over the course of several years, your home becomes more than an asset. It can be an important resource to create additional wealth, to make smart investments, to start your own business, or any number of other possibilities. That’s something that you simply cannot rely on when renting.”

The equity in your home can be accessed while you own the property through tools like home equity loans and home equity lines of credit (HELOCs), as well as cash-out refinancing. This can convert some of your equity into funds that can be used to consolidate debt, finance home improvements, or pay for other large expenses.   

Comparing the Factors in Renting vs. Buying

  Renting Buying
Upfront costs Lower move-in costs (deposit + first month’s rent) Higher upfront cash (down payment + closing costs)
Monthly payments Rent may increase over time Fixed-rate mortgages offer more long-term payment stability
Flexibility Easy to move when a lease ends Harder and more expensive to relocate quickly
Maintenance & repairs Landlord typically covers repairs Owner pays for all maintenance and repairs
Equity No equity built Builds equity over time
Wealth building Payments provide housing only Potential appreciation and long-term wealth growth
Customization Limited ability to personalize Full control over renovations and upgrades
Tax considerations Some state and local markets offer renter tax credits for low-income households Possible tax deductions, depending on homeowner's situation

Key Questions to Ask Yourself 

When deciding which is the better option for you at this stage in your life, ask yourself the following questions:

  • How long do you plan to stay in one place?
  • What is your current financial situation?
  • Are you ready for maintenance responsibilities?
  • How stable is your career and income?

Buying might make sense if:

  • You plan to stay for 5+ years
  • You have access to funds for the upfront expense and want to build equity through stable monthly payments over the long-term
  • You're prepared to take responsibility for the home maintenance 
  • You're confident in your career and ability to repay the home loan

Renting may make sense if:

  • You expect to move soon
  • You don't have the funds to purchase a home while maintaining savings for emergencies
  • You prefer not to handle repairs
  • Your career and/or income are less reliable

There are many considerations when it comes to choosing between renting and buying. However, if you’re on the fence, there’s one constant bit of wisdom. It pays to fully explore the possibilities. Once you have a full understanding of your options, the answer may surprise you.

Are you curious to see what buying a home would look like for you? A mortgage loan officer can help you compare your options. Call 1-855-744-2668 today for personalized guidance.

How to Get a Mortgage Loan: Key Steps Homebuyers Should Know | PNC Insights