If you have an idea of what the amounts are for each of these considerations, you can get a good sense of whether renting or buying is better for you financially by using one of many online calculators. Ginnie Mae has a calculator here in which you can play with the numbers to get a sense of which one saves you more money. Let's run through a quick example. Living in the San Francisco Bay Area, this example might seem outrageous for others across the country, but this is a reality here for a three-bedroom house.
Current rent: $2,000
Purchase Price of Home: $500,000
Down Payment %: 20% (20% will avoid having to pay a monthly fee for private mortgage insurance)
Length of loan in years: 30
Interest Rate: 4% (this is mostly dependent on your credit history and credit score)
Years you plan to stay in the home: 10
Property tax rate: 1%
Yearly home value appreciation rate: 1% (we'll keep this conservative with today's housing market)
These facts suggest a savings of $120,360 if you buy the home over renting. This assumes being in the home for more than three years and having 20% ($100,000 in this case) to put down. But who has $100,000 to put down on a house? Ok, good point. Let's look again with 0% down. We still get a savings of $89,801 if you buy the home. Well, what if your credit isn't very good? Let's change the interest rate to 6%. We still have a savings of $19,981 if you buy the home. If we go back to our original assumptions with 20% down and 4% interest rate, you find a breakeven point with the length of time at just less than three years.
Other assumptions are included in this specific calculator such as private mortgage insurance, homeowner's insurance, and other closing costs of obtaining the loan that Ginnie Mae has included but for which they have not disclosed any details. Needless to say, this calculation should not solely be relied on in making a rent vs. buy decision, but it can be helpful when running numbers to get some ballpark figures.
I still tend to find more financial benefits from buying a home over renting since you will have an asset when it is all paid off, while renting leaves you with nothing. Even if you never sell your house and are not able to take advantage of the cash from that asset, it will be an asset that can be passed down to heir of your estate.
Of course, all of this only addresses the financial side of buying a home and does not consider the emotional considerations of renting vs. buying. Those factors can often be just as important in the decision process. Let me know what you think about what other factors should be considered when making this decision as you may come up with other justifications to rent rather than buy.