8 benefits of owning a home: Things you should consider

Everyone says they want to own a home. But do the benefits of owning a home live up to the dream?

Whether you're a first-time buyer exploring your options or someone reconsidering your housing situation, examining the reality of owning a home helps determine if homeownership makes sense for you.

What are the benefits of owning a home?

Homeownership advantages span multiple areas of your life, from financial benefits to personal satisfaction. Here are eight key reasons why millions of Americans choose to buy rather than rent.

1. Building equity over time

One of the most compelling benefits of home ownership is the opportunity to build equity with every mortgage payment. Unlike rent, which provides no return on investment, each monthly payment increases your ownership stake in the property. Your net worth grows as you pay your mortgage principal, and your home appreciates in value.

Real estate historically appreciates over time, though market conditions vary by location and economic factors. Even minor appreciation rates build wealth over the years, making homeownership a powerful long-term investment strategy.

2. Tax benefits and deductions

Homeowners enjoy several tax advantages that renters don’t receive. The mortgage interest deduction allows you to deduct interest paid on your home loan, potentially saving thousands of dollars annually on your tax bill. 

Additionally, property tax payments are often deductible. If you sell your primary residence, you may exclude up to $250,000 in capital gains ($500,000 for married couples filing jointly) from your taxable income.

These tax benefits can make homeownership more affordable than it initially appears, reducing your monthly housing costs compared to renting a similar property.

3. Housing stability and predictability

Owning your home provides stability that renting simply can’t match. You won't face forced moves due to landlord decisions, restrictions on how you use your space, or unexpected rent increases. Fixed-rate mortgages offer predictable monthly payments for the life of the loan, making long-term budgeting easier. 

Housing stability becomes particularly valuable for families with children, as it eliminates the disruption of frequent moves and allows kids to stay in the same school district and maintain friendships. That has a major impact on commutes, too, since you don’t need to worry about ending up somewhere much further from your workplace.

4. Fixed housing costs with mortgage payoff

While renters face ongoing monthly payments indefinitely, homeowners with traditional mortgages eventually pay off their loans completely. Once your mortgage is paid, your monthly housing costs drop dramatically due to property taxes, insurance, and maintenance. Reasons to purchase a home include eliminating your largest monthly expense and providing tremendous financial freedom in retirement.

5. Protection against inflation

Property values and rents also typically increase as prices rise throughout the economy. If you own your home with a fixed-rate mortgage, your housing payment remains constant while rental prices climb, making your housing less expensive over time.

Property values have historically outpaced inflation rates, helping homeowners maintain and grow their purchasing power over the long term.

6. Freedom to customize and improve

Whether you want to install hardwood floors, create a home office, or landscape your yard exactly how you envision it, the advantages of owning a home include complete creative freedom that renters don't have.

You can paint walls any color, renovate rooms, add fixtures, or make structural changes without seeking permission from a landlord. These improvements can enhance your quality of life while potentially increasing your home's value.

7. Pride of ownership and community connection

Pride of ownership motivates many homeowners to better maintain their properties and invest in their neighborhoods. Homeowners often develop stronger community ties and participate more actively in local organizations and civic activities.

8. Potential rental income opportunities

You might rent a basement apartment, spare room, or parking space to offset your mortgage payments. Some homeowners eventually convert their primary residence into a rental property when they move, creating a passive income stream. These income opportunities can make homeownership more affordable and provide additional financial flexibility.

Are there any drawbacks to owning a home?

While homeownership offers many advantages, there are potential drawbacks to consider, too.

Maintenance costs and responsibilities

When the roof leaks, the furnace fails, or the plumbing backs up, you must handle the cost and coordination of fixes. These expenses can be unpredictable and substantial, requiring emergency funds that renters don't need.

Regular maintenance like lawn care, gutter cleaning, and HVAC servicing also falls on your shoulders, representing both time and financial commitments that some people prefer to avoid.

Market fluctuation risks

Real estate values can decline, potentially leaving you owing more on your mortgage than your home is worth. Market downturns can trap homeowners who need to sell, forcing them to take losses or remain in homes that no longer meet their needs. Plus, shifting interest rates might lead to higher mortgage payments that you originally planned. 

Unlike stocks or bonds, real estate is illiquid, meaning you can’t quickly convert your home equity to cash without selling the property and potentially paying substantial transaction costs.

High upfront and ongoing costs

When purchasing property, down payments, closing costs, inspection fees, and moving expenses can total tens of thousands of dollars. Then, you face ongoing costs of ownership, including property taxes, homeowners insurance, HOA fees, and utilities (which landlords sometimes cover in rental situations).

Reduced mobility and flexibility

Job opportunities in other cities become harder to pursue when you first need to sell a home. Even local moves require selling your current home and buying another, involving transaction costs and time that renters avoid.

Property tax obligations

Property taxes are an expense that continues after you pay off your mortgage. Tax rates can increase based on local government decisions or property value assessments, creating unpredictable long-term costs.

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Owning vs. renting comparison

Factor

Owning

Renting

Factor	Owning	Renting
Monthly costs	Mortgage, taxes, insurance, maintenance	Rent payment only
Upfront costs	Down payment, closing costs, inspections	Security deposit, first month's rent
Equity building	Yes, through payments and appreciation	No equity building
Maintenance	Owner's responsibility and expense	Landlord's responsibility
Flexibility	Limited, must sell to move	High, typically 30-day notice
Tax benefits	Mortgage interest, property tax deductions	No tax benefits
Customization	Complete freedom to modify	Limited by lease restrictions
Stability	High; no forced moves	Lower; subject to landlord decisions

Should you buy or rent?

Answering these key questions can inform your decision between buying and renting.

Do you have the financial foundation to buy?

Consider whether you have adequate savings for a down payment while maintaining an emergency fund for unexpected expenses. You don’t want your bank account balances to reach $0 after closing. Calculate monthly ownership costs, including mortgage payments, property taxes, insurance, and estimated maintenance, to ensure they fit comfortably in your budget.

With Better, you may be able to put as little as 3% down, which can make homeownership accessible even if you haven’t built up a large nest egg. And if you’re still working toward your savings goal, you could also explore rent-to-own programs as an alternative path to getting into a home sooner.

Stable income and good credit scores improve your chances of securing favorable loan terms, making homeownership more affordable.

How long do you plan to stay?

Real estate transaction costs make homeownership most beneficial when you plan to stay in one location for several years. The general rule suggests staying at least five years to recoup buying and selling expenses, though rates vary by market conditions and individual circumstances.

If your job requires frequent relocation or you're uncertain about your long-term plans, renting might provide the flexibility you need.

What motivates your desire to buy?

Examine your reasons for wanting to buy. Sound motivations include building wealth, stabilizing housing, and controlling your living environment. Less sound reasons include pressure from others, tax benefits, or assumptions that buying is always better than renting.

Your personal values and lifestyle preferences should align with the responsibilities and benefits of homeownership to make the decision successful in the long term.

First-time homebuyer tips

First-time buyers can improve their chances of successful homeownership by following these essential tips:

— Establish a realistic budget: Calculate total ownership costs, not just mortgage payments, to avoid financial strain.

— Check and improve your credit score: Higher scores unlock better interest rates, saving thousands over your loan's lifetime.

— Save for your down payment and closing costs: While some programs allow lower down payments, having more cash upfront reduces monthly payments and eliminates private mortgage insurance.

— Get pre-approved for financing: Pre-approval shows sellers you're a serious buyer and helps you understand your purchasing power.

— Research neighborhoods thoroughly: Consider factors like schools, commute times, future development plans, and resale potential.

How to start your homebuying journey

Ready to explore homeownership? Follow these steps to begin your journey:

1. Understand your budget: Calculate how much you can afford based on your income, debts, and savings. Use the 28/36 rule as a starting point, limiting housing costs to 28% of gross income and total debt payments to 36%.

2. Get pre-approved: Better's streamlined pre-approval process can get you approved in as little as three minutes without extensive paperwork. Answer a few questions, complete a soft credit check, and receive a pre-approval letter to strengthen your offers.

3. Start looking for a home: Work with a knowledgeable real estate agent who understands your needs and budget. Viewing multiple properties helps you understand market pricing and find the best match for your requirements.

4. Make an offer and negotiate: When you find the right home, your agent can submit your competitive offer and negotiate terms or counteroffers that protect your interests.

5. Complete the mortgage process: Provide all necessary documentation to your lender and stay responsive throughout underwriting to ensure a smooth closing.

6. Close on your home: Complete the final walkthrough, sign closing documents, and receive your keys to become a homeowner.

Start your homeownership journey with Better

Owning a home has many benefits, from building equity and enjoying tax benefits to gaining more control over your living space. Homeownership involves responsibilities and costs that renting doesn't, but the long-term benefits often outweigh the drawbacks.

Whether you’re exploring homeownership for the first time or reconsidering your housing situation, Better makes the mortgage process faster and more transparent than traditional lenders. Our digital platform streamlines pre-approval, often completing the process in minutes rather than days, and our experienced team guides you through every step of the homebuying journey.

Ready to explore your homeownership options? Get pre-approved with Better today and take the first step toward owning your dream home.

...in as little as 3 minutes – no credit impact