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In this article, you'll learn:
Should military families rent or buy a home?
It's one of the top questions military families repeatedly ask themselves during their active-duty careers. The answer often changes with every new set of PCS orders, which further complicates the decision.
The only accurate statement about military members buying and renting real estate is that there isn’t always an obvious answer. Somewhere between logic and emotion is the home that best fits the service member and their family’s needs. However, in some circumstances it makes more sense to rent a house, but in others it's better to buy a home.
How to Decide Whether to Rent or Buy at Your Next Duty Station
When Renting a House Is the Best Option
Renting a house is a common first thought when it’s time to PCS. It’s usually the easiest and quickest solution, and those are desirable qualities during a relocation. Here are some circumstances where renting a house makes sense:
- The duty station is short-term.
- The location is undesirable in the long run.
- Finances are tight, you’re saving to buy a home, or you have bad credit.
- You currently own another home.
- It’s your first time living in a single-family home, and you don’t want an owner’s responsibilities.
The Case for Buying a Home
Many military families believe that building long-term wealth stems from investing in real estate, and they’re eager to take on the home-buying process at each duty station. There are also additional reasons when buying a home is the best option:
- It's the last house before military retirement.
- The family needs special home criteria: large square footage or disability adaptations are two examples.
- You own a banned breed of dog.
- The mortgage amount is the same as or less than renting.
- The need for specific location amenities, like regular medical support.
Start Planning with a Rent vs. Buy Calculator
Early in the research process, it's sometimes difficult to discern what a member's BAH (Basic Allowance for Housing) and personal finances can afford each month for housing, especially when learning all the details of buying a house at the same time.
One way to decide if renting versus buying a home is best is to use a reputable online calculator. They are a solid resource for beginning price comparisons, and they take the guesswork out of doing the math.
There are many calculators online. It's a good idea to try at least three because each is nuanced. Here is one to begin investigating possibilities: SmartAsset When to Rent vs. Buy.
These tools can help users determine whether renting or buying makes more sense, depending on their current circumstances. Calculators use figures such as location, purchase or rent price, and length of stay in the city.
Applying an “affordability predictor” (often found in a Rent vs. Buy Calculator) is a crucial first step in determining whether homeownership or renting is the best solution.
Consider A Real Estate Agent
Although calculators are a good start, they don’t replace a real estate professional who is deeply knowledgeable about the area. Agents and mortgage lenders track local housing trends and have a solid understanding of how the buyer and rental markets typically behave.
Other Factors Beyond the Rent vs. Buy Calculator
Sometimes it's the intangible factors that help decide whether it’s best to rent or buy. Military families usually can’t pick their assigned duty station, but they have more options when choosing a specific location that offers the amenities they prefer.
The answers to these factors often point to a more definite buy or rent decision:
- Spouse employment opportunities
- Public or private school availability
- Commute times
- Local real estate inventory
- Future military plans, like retirement or a promotion track
Buying a House While in the Military
In America, homeownership is one of the top financial goals of military and non-military families alike for some of the following reasons:
- Tax deductions
- Equity
- Predictable mortgage payments (unless using an adjustable mortgage loan)
- Likely increased value over time
- The security of homeownership after 15, 20, or 30 years
If a service member's overall financial goals align with owning real estate, these homeownership benefits make for a smart investment.
However, some buyers overlook certain costs involved in buying a home. The buying process begins expensively, and upfront fees can be thousands of dollars. Down payments, closing costs, and various insurance premiums are due before the keys are handed over.
Later, homeowners encounter property taxes, maintenance and repair investments, HOA fees, and sometimes a decreased home value. These are all out-of-pocket costs for homeowners.
10 Steps to Buying a House for Military Families
In the best-case scenario, there’s time to make a homebuying plan at least a year before the purchase, but that’s not always the case in military life. Here’s a quick breakdown of how to buy a house.
- Build and repair credit. Verify details and correct credit report errors.
- Budget wisely and save. The goal is to save cash for upfront costs, such as the down payment and closing costs.
- Learn about financing and the VA loan. It takes time to learn about home financing. An agent can help, but it's smart to read ahead. Start here: Complete VA Home Loan Guide for Military and Veteran Homebuyers.
- Find real estate professionals. Ask family, friends, and homeowners in the area for recommendations on agents and mortgage lenders.
- Create the home’s non-negotiable list. There are some things military families won’t live without, like the number of bedrooms and bathrooms, or location and commute times.
- Tailor your home search. Don’t waste time looking at out-of-budget properties or ones that don’t meet the non-negotiable list.
- Place an offer and deposit earnest money. Work with an agent to place a competitive offer and earnest money amount.
- Schedule a home inspection. Home inspections always benefit home buyers. An agent will help determine if the market dictates waiving the inspection.
- Wait for final approval. The bank verifies all the finances and gives the green light to move ahead with the purchase.
- Prepare for and attend closing. Plan a walkthrough and inventory the home to avoid any last-minute problems at the closing table.
See Home Buying 101: What You Need to Know Before Buying a Home for further details on the process.
How Military Homebuyers Are Unique
The VA Loan
Compared to the civilian population, military members have unique and cost-effective real estate perks, such as access to the VA loan. The U.S. Department of Veterans Affairs reports that about 415,000 VA loans are granted each year.
With a zero-down payment and no private mortgage insurance required, the VA Loan is often the frontrunner as the most affordable loan with the least stringent financial benchmarks, such as credit score requirements. Funding fees are also waived for service members who meet disability requirements.
The VA loan is appealing because of its affordability and accessibility. Often, it’s a significant asset for potential military homebuyers, but there are drawbacks to consider.
Not every mortgage lender is proficient in working within federal government constraints. There are numerous details, and inexperienced lenders can create problems. Military members buying a home for the first time in areas without a large military presence may have difficulty finding real estate agents and lenders familiar with their unique needs.
Military Homebuyers Move Frequently
Since military buyers PCS regularly, it's challenging to secure an affordable home that allows them to recoup the initial investment before receiving orders to move again.
Service members often wonder if buying a home is worth it if they might PCS in a few years. Part of that decision is a personal preference about being comfortable renting and being a landlord during PCS orders to different duty stations. Becoming a landlord, whether accidental or intentional, is time-consuming, and it requires careful planning to keep the business profitable.
It's also common for unexpected orders to arrive. Early or late departures to revised locations are all possibilities that make the home-buying decision more complicated.
Photo by Carolin Voelker from baseimage via Canva.com
What Military Members Should Know Before Renting a House
Perpetual rental life typically gets a bad rap, sometimes for good reason. Every month, a military member sends rent to a landlord or property management company, and their money doesn't go toward equity.
There’s a chance the landlord/tenant relationship could be challenging for those without experience or who lack strong communication skills. Add the prospect of unexpected rent hikes and the restrictions on customizing the house to personal preferences, and rental life might not seem so appealing.
However, rental home markets usually remain strong surrounding military bases across the country. The short moving timelines, flexible lease terms with less commitment than home ownership, and the ability to choose a home based on personal priorities, including public schools and transportation, are all still valued by service members and their families.
Although renters don’t build equity, many long-term renters don’t view rent as a waste. They are, after all, supplied month after month with the housing solution they’ve chosen, with fewer upfront costs and little to no upkeep and repair fees.
How Military Home Renters Differ from Civilian Renters
Because military families factor in inevitable PCS moves into their 5- or 10-year plans, renting a home may well be a purposeful part of their finances. Renting under budget allows for savings that could turn into a significant down payment, cover closing costs, or serve as emergency funds for future home-buying plans.
Another reason military members choose to rent is the unaffordability of real estate near military bases in expensive zip codes. It's widely known that BAH doesn’t always fully cover mortgage or rent payments in high-cost locations.
This deficiency in BAH is compounded by the years-long trend of inflated rental prices across the country. This is driven by a lack of inventory and increased competition for rental homes, which makes homeownership unaffordable for many.
On-Base Military Housing
On-base housing is one of the most unique benefits military life offers. Renters pay their monthly BAH to companies contracted with the Department of War to provide privatized military housing.
Many service members and families choose to live on base for affordability, larger square footage, limited housing near the base, free maintenance, and built-in safety and security measures. These are reasonable factors to consider before renting on base, but unfortunately, there are some drawbacks.
Quality and safety issues have plagued private military housing across the country for nearly a decade, and solutions have been slow to emerge. The fixes intertwine congressional oversight and the housing companies, which makes for a slow correction process.
Traditional complaints that stem from living in a rental property include little opportunity to customize the interior and exterior of the home and the lack of privacy due to shared walls or small yard spaces.
Although the disadvantages of military housing overlap with renting off base, the built-in convenience factors usually influence the overall decision to live there. Short commutes, direct access to food and gas, and military-only programs certainly provide benefits not typically found off base.
Learn more about military housing:
Reconsider the Buy vs. Rent Formula Before Each Move
With each move, service members have many factors to consider before deciding whether to buy or rent their next home. The time spent at a duty station and the availability of funds are two of the principal considerations. Planning for unexpected circumstances, such as becoming a landlord or expanding their family, also drives the decision-making process.
Between each family's individual differences and each new move, the same buy vs. rent formula that worked previously shouldn’t be reused every time. This is when an online calculator can shed light on your specific circumstances. This information, coupled with guidance from a real estate agent, will help service members and their families determine their comfort level with buying or renting a home.
MilitaryByOwner has helped military families navigate housing and relocation decisions since 2000. Explore additional PCS resources, military housing guides, and relocation tools designed specifically for military life.
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