Affordable Housing: Is It More Affordable to Buy a House or to Rent?
6 minute read
April 7, 2023


In regard to affordable housing, we often get asked whether buying a house is more affordable than renting. 

Homeownership has long been considered the American dream, and it proves to be a worthwhile pursuit for most. But it’s not always the most practical option for everyone. 

In this article, we’ll dive into affordable housing and explore the pros and cons of renting versus buying.

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Introduction to affordable housing

Affordable housing is a common term used to describe housing that fits the budgets of Americans with low-to-moderate incomes. 

The overall goal of affordable housing is to ensure everyone has access to safe and decent housing, regardless of their income level. 

People often achieve this through: 

  • Government-generated and administered programs 
  • Finding affordable rental homes themselves 
  • Purchasing the right home with an affordable mortgage

Who qualifies for assistance programs for affordable housing?

Affordable housing is available to individuals and families who meet certain income requirements. 

These requirements vary depending on the program but typically involve a percentage of the area’s median income. Generally, those earning less than 80% of the area median income are considered eligible for affordable housing.

Various affordable housing programs include rental assistance, low-income tax credits, and Section 8 housing. 

These programs are designed to help those struggling to afford housing and provide them with safe and stable living conditions.

Section 8 housing

Section 8 housing is a popular, affordable housing program that provides rental assistance to eligible families and individuals. 

The program is administered by HUD, the Department of Housing and Urban Development, and provides vouchers that can be used to offset the cost of the rent.

Section 8 housing is designed to provide stability for those struggling to make ends meet—not those looking to develop their long-term equity through property appreciation. 

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Homeownership vs. renting: Which is more affordable?

One of the biggest questions people have when deciding whether to buy or rent is which option is more affordable. 

While renting may seem like the more affordable option in the short term, buying a home can be more affordable in the long run.

Over time, the cost of owning a home becomes more predictable and stable. Renting costs can go up every year, making it difficult to plan for the future. 

With a fixed-rate mortgage, however, your monthly payment will remain consistent for the loan’s lifetime. This also helps you build up equity.

This equity can then pay off debt, make home improvements, or even finance a child’s education.

Factors to help decide between renting and buying

When considering whether to rent or buy a house, there are several important factors to consider. These factors include:

Financial stability

Owning a home comes with many financial responsibilities, including maintenance costs, mortgage payments, and property taxes. 

However, showing you can manage a mortgage successfully goes a long way to proving you’re financially stable—which can lead to more opportunities from new lenders, employers, and government program administrators. 

However, if your financial situation is unstable or you can’t rely on a regular income for the foreseeable future, homeownership becomes more challenging. 


Rents and housing costs vary tremendously across the country, and in some cases, it may be cheaper to rent than to buy—though this is usually not the case. 

Additionally, factors like the direction of overall home values of the neighborhood and the local economy can impact a particular home’s value, which can affect your decision to buy.


If you enjoy the flexibility and don’t want to be tied down to a particular location, renting may be a better option. 

On the other hand, if you’re someone who wants to put down roots and build equity, homeownership may be a better fit.

Hidden costs of homeownership

While owning a home can be a great investment, several hidden costs can add up quickly. These costs could include the following. 

Property taxes

The amount of property tax you pay depends on your property’s value and the tax rate in your area.

Maintenance and repairs

Owning a home also comes with the responsibility of maintaining and repairing the property. These repairs can include everything from fixing a leaky roof to replacing a broken appliance.

Homeowners association fees

If you live in a community with a homeowners association, you may be required to pay a monthly or annual fee. 

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The hidden costs of renting

Renting a property may seem like a cheaper option than buying a home, but several hidden costs can add up quickly. 

Security deposit(s)

Landlords often require a significant deposit before move-in, which can be up to several months’ worth of rent. This amount is typically refundable, but it can tie up a lot of your money in the meantime.

Application fee

Many landlords charge a non-refundable fee to process rental applications. This fee can range from $25 to $100 or more, and if you’re applying to several places, it can quickly add up.


Renters also need to consider the cost of utilities, which are often not included in the monthly rent. Depending on the property’s size and your usage, utilities such as electricity, gas, water, and internet can cost hundreds of dollars per month.

Maintenance and repair costs

Although landlords are responsible for most repairs, tenants may still be responsible for certain damages or wear and tear. 

Additionally, renters may need to pay for routine maintenance, such as lawn care or pest control.

Plus, unlike homeownership, the money you put into maintenance or repairs will not be recouped by you anytime. 

Pros and cons of each option

There are both advantages and disadvantages to renting or buying a house. 

Renting pros:

  • Flexibility
  • Lower upfront costs
  • No responsibility for maintenance and repairs

Renting cons:

  • No equity for you
  • Limited control over the property
  • Rent can increase over time

Homebuying pros:

  • Equity building
  • Control over the property
  • Stability

Homebuying cons:

  • Higher upfront costs
  • Responsibility for maintenance and repairs
  • Property value can decrease

Buying vs. renting: What’s the verdict?

While renting may seem like the more affordable option in the short term, buying a home can actually be more affordable in the long run. The decision depends on your financial situation, lifestyle, and personal goals.

By building equity, stabilizing your monthly payments, and enjoying the intangible benefits of homeownership, owning a home can provide a more affordable and rewarding living experience.

If you’re interested in learning more about homeownership or affordable housing programs, AAA Banking can help. 

Our partnership with HomeScout allows you to find and compare affordable homes in your target area, and we offer a variety of mortgage loan programs to fit your needs. 

Contact AAA Banking today to get started.

Image by Gerd Altmann from Pixabay

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