Should You Rent or Buy a Home During Residency?

Beth Skwarecki

Disclosures

September 16, 2016

How Much Money Have You Saved?

"We always recommend that people wait to buy a house until they have a 20% down payment," says Poldiak. With that amount, you won't be required to pay private mortgage insurance, which adds to the cost of your mortgage payment. Another advantage, she says, is that when you sell the house later on, the money that went toward the down payment can help you cover closing costs and any unexpected expenses associated with the sale.

On the other hand, Carpenter, who argues in favor of buying, recommends checking your state's options for first-time homebuyer programs. These programs can cover your closing costs or allow you to buy a home with a very small down payment. On the downside, you pay for the privilege with higher monthly payments.

How Much Debt Can You Afford to Take On?

Student loan debt is often the reason why it's hard to save up much of a down payment. If your student loans are at a high interest rate, Poldiak says it makes more sense to put money into loan payments while renting than to prioritize saving for a house.

When you are ready to buy, she says, "banks will let you borrow more than you probably should." She likes the rule of thumb that a loan should be no more than two to three times your annual income.

If you do intend to stay in the same house once your income increases, it's easier to pay down debt quickly. For that reason, debt is less of an issue for residents who expect to be in a higher-earning specialty.

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