Should you rent or buy a home? Here's how to decide
With the rising cost of goods and everyday expenses, it’s not always easy to figure out which would make more sense in the long run: renting or buying a home? Both come with their own costs and trade-offs, and the decision often depends on your finances, priorities, and long-term plans.
For financial consultant Chinkee Tan, the answer is quite simple: "Rent if you cannot afford; buy if you can afford. That's it," he said in the 13th episode of PhilSTAR L!fe's Generations podcast on debts and investments.
Jax Reyes, a finance content creator, pointed out that you have to factor in your personality. "If you're the type na hindi valuable sa 'yo to have a home, ikaw 'yung tipong gusto mo lipat ka nang lipat, then just rent," he said. "There's nothing wrong with renting."
Reyes, who came from a Chinese household, noted that owning a home is also rooted in tradition, saying he learned from his parents that it provides stability.
"Psyche lang nila 'yun. Because if you have a home, at least hindi ka mapapaalis. Kahit anong mangyari, kahit wala kang trabaho, you have that home to go," he said.
Which is more practical?
Vince Rapisura, a finance lecturer at Ateneo de Manila University, echoed what Reyes said, noting that the decision also depends on one’s current life stage and circumstances.
"Depende talaga siya sa stage ng life mo eh. For example, if you are a person who's building a family tapos nandiyan 'yung kids, magpapaaral ka. And usually kasi 'pag nagpapaaral tayo, gusto natin na malapit lang 'yung school sa bahay natin, ganyan. For me, mas practical na bibili ka ng bahay nun kung kaya mo financially," he told L!fe.
He also pointed out that some overseas Filipino workers invest in building homes in the Philippines that only end up being lived in by caretakers, which may not always be practical depending on their situation. "If you're not really going to live in the house that you're going to build, for me, that's very impractical. Palabas 'yung pera."
According to Rapisura, there are two ways to view homeownership: as an investment or as a place to live. While owning a house has its perks, he said that it's not always the best and most realistic option for everyone, especially with the Philippines' housing backlog estimated at 10 million units by 2028.
He noted that affordable housing remains inaccessible to many who need it most, putting homeownership beyond their reach. While developers continue to roll out promos and condo prices are often described as easing, he said they remain costly in reality. Even small units of around 20 square meters, he added, can still fetch around P3.5 to P4 million—levels he believes are far from mass affordability.
Renting can be a practical alternative, especially for those who value flexibility. These include single people who work remotely and enjoy exploring different places.
Rapisura stressed that one factor people must look into when weighing these options is unrecoverable costs. For renters, that's the monthly rent. For homeowners, it includes mortgage interest, property taxes, and maintenance costs, which can total about 10% of a home's value each year. He said that comparing these costs with the cost of renting a similar home can help people decide which option offers better value.
Finally found a property you like?
When purchasing a property, finance expert Fitz Villafuerte advised keeping your purpose for it in mind.
"If you plan to buy and then sell, ask yourself when you will sell it. How many years from now? And more importantly, how capable will you be in finding a buyer? I've seen people buy pre-selling condos and have to spend years trying to sell them. If you plan to rent it out, check if the location has a market for your desired tenants," he explained.
Rapisura shared his personal rule when buying a home, saying buyers should first save 20% of a property's value.
"So, kung P2 million 'yan, dapat naka-save ka ng 20% niyan, at 'yung 80%, 'yun lang 'yung hihiramin mo. Kasi kung hindi mo mabibigay 'yung 20%, hindi ka makakapag-down ng ganyan; mahihirapan kang makakuha ng favorable terms and conditions from the bank. And it is also a way for you to practice kasi kapag nag-sisave ka every month for that, pagka naging loan na yan, at least sanay ka na na magbayad, na-integrate mo na," he explained.
He added that a home's monthly amortization should ideally not exceed 20% of a person's salary. This benchmark, according to Rapisura, can help buyers determine early on what kind of property they can realistically afford based on their income.
"For example, P30,000 'yung kinikita mo every month, so ang 20% niyan ay P6,000. 'Yan per month lang dapat 'yung binabayaran mo doon sa property. O dun pa lang, dun mo na makikita kung anong property 'yung mabibili natin sa P6,000 per month, 'di ba? Kasi kung titignan mo, 'yung 20% na 'yan of the salary, ang laking chunk na niya," he said, adding that because homeownership comes with many other expenses, including food and daily necessities, it is ideal to have someone to share the financial responsibility with, be it a partner or a friend.
Rapisura also suggested limiting a home loan's repayment period to a maximum of 20 years to avoid spending decades paying off a property. He also said that a home's value should not exceed three times a buyer's annual salary to ensure it remains within a manageable price range.
Is rent-to-own worth considering?
Per Villafuerte, aspiring homeowners should determine whether they are short on savings or simply unable to afford the property they want to buy.
He explained that a rent-to-own arrangement can benefit people who earn enough to afford a home but have not yet accumulated a down payment. However, if the monthly payments would only strain a buyer's budget, the arrangement may simply “delay the problem and make it more expensive.”
He added that for many people with limited savings, spending one to two years aggressively building an emergency fund and down payment might be best. "This often leads to a stronger financial position than rushing into ownership through an RTO arrangement. That doesn't mean RTO is bad—it just means the numbers need to work beyond the initial affordability of getting in," he explained.
Villafuerte pointed out that a rent-to-own arrangement may be a good option for those with a stable income as well as those who are expecting their savings to improve in the next few years but are still having trouble saving enough funds for a down payment.
That being said, it may not be the best fit for people with unpredictable earnings or those who are currently struggling to make ends meet, as the added financial commitment could only become difficult to sustain.
Rapisura urged buyers to carefully review contract details, particularly the rent credit or the portion of payments that will be deducted from the property's value. He warned that in some cases, the rent credit may be minimal, meaning much of the payment goes toward rent rather than ownership.
“Do not judge rent-to-own by the early monthly payments during the rent part. Judge it by the total contract price, credited payments, loan balance, interest rate, and penalties,” he said.
Villafuerte also pointed out that one of the most common mistakes people make when deciding to buy a home is focusing only on the initial payments and upfront expenses, without fully considering how the purchase will affect their long-term cash flow.
Like Tan and Reyes in the Generations podcast episode, both Rapisura and Villafuerte emphasized the importance of building strong financial habits first and foremost.
"If you can handle small debts and be responsible with credit cards, then you can manage a mortgage payment later when you have enough income to afford a property," said Villafuerte.
