Home ownership offers one big advantage over renting if you’re laid off

Americans are growing more uneasy about unemployment, according to new data.

Job loss expectations rose in March, according to the New York Fed’s Survey of Consumer Expectations, and Reuters reports that expectations for the unemployment rate a year from now hit their highest level since April 2025.

If those fears turn into lost paychecks, the housing consequences could mean very different things for renters and homeowners.

In 2025, 367,460 US properties had foreclosure filings, according to ATTOM. During the same year, landlords filed 1.23 million eviction cases across the 38 cities and metro areas tracked by Eviction Lab, even though those places account for only about one-third of the nation’s renter households.

Joel Berner, senior economist at Realtor.com®, says it’s not an apples-to-apples comparison, because homeowners generally start on a stronger financial footing than renters. But the data also points to a system that gives borrowers more runway after a missed payment compared to renters.

Mortgage delinquency can open the door to delay, paperwork, review, and possible workout options, while rent delinquency can put a household on a much shorter path toward displacement—they’re small differences in a stable economy, but hard to ignore in a shakier labor market.

Home ownership provides owners with an advantage over renters in case of unemployment or financial hardship, according to experts. bongkarn – stock.adobe.com

When a paycheck disappears, renters face the shorter clock

The difference starts with the clock.

“There is a 120-day federal waiting period to begin the foreclosure process, which gives the homeowner time to explore alternatives,” says Lynette Arrasmith, a home loan specialist at Churchill Mortgage. “The process for an eviction can be weeks to a few months, depending on if you need to go to court.”

That means less time to find new income, borrow money, or work out a payment plan. But even when renters do have time to explore these options, they often have little negotiating power, says Andrew Gardner, founder of Leap Properties.

“A renter who’s behind on rent doesn’t have much leverage at all,” he explains. Unlike mortgage borrowers, renters usually don’t have access to formal systems like forbearance or loan modification that can pause or restructure payments while they grapple with a financial shock.

There’s also a different business logic that can work against renters and for homeowners.

“An eviction,” explains Berner, “leaves a landlord with a vacant unit they can lease out right away and get back to generating income with. Landlords are immediately in a stronger position post-eviction, while lenders who foreclose still have a lot of work to do.”

That’s not to say that all landlords are inflexible—many are still willing to work with renters, says Arrasmith. She encourages any renter who has lost their job and is struggling to make a payment to reach out to their landlord to request a special arrangement.

“As a landlord myself, I would consider a grace period without late fees or partial payments, if that would help,” she adds.

But those kinds of arrangements are ad hoc, not guaranteed, and they depend far more on landlord discretion than on built-in legal protections.

Why the system is built to give homeowners more chances

That may be the key advantage that homeowners have in this situation: Their ability to request special arrangements during financial hardship is baked into their mortgage terms.

Under federal mortgage servicing rules, a servicer generally cannot make the first foreclosure filing until a borrower is more than 120 days delinquent—that means approximately four months to find a new source of income, negotiate new mortgage terms, or explore other solutions.

Those rules also require servicers to evaluate borrowers for available loss-mitigation options, and they restrict foreclosure activity while a complete application is under review.

“There are systems of forbearance and loan modification for homeowners that allow them to pause or change payments during periods of financial instability that don’t really exist for renters,” says Berner. “The complexity and long timeline of foreclosure tend to favor keeping a borrower in place, so there are institutions to facilitate that.”

And if none of those options works, homeowners also have more formal off-ramps available to them. 

“The homeowner almost always has more options,” says Gardner, pointing out the options to do a traditional or short sale.

Why that still doesn’t make buying a house a safety net

But it doesn’t mean homeowners are immune—because those off-ramps are dependent on equity.

“If you bought at peak prices with a small down payment and values have dropped, you don’t actually have an asset you can sell your way out of,” says Gardner. “You’re just in a slower version of the same problem” facing renters.

And while foreclosure may move more slowly than eviction, it can leave behind more serious long-term damage.

“The credit damage from foreclosure follows you for years in ways that make it harder to rent afterward anyway,” he says.

A foreclosure can tank excellent credit by nearly 200 points and stay on someone’s credit profile for seven years, according to current standards. In addition to making it difficult to rent, it can also trigger a waiting period between five and seven years before you can buy another home.

Renting, meanwhile, can offer its own form of flexibility.

“If I’m thinking like a renter, I do have more options because breaking a lease is much easier than not fulfilling your mortgage payments,” says Arrasmith. That situation—while sometimes costly in its own right—can preserve someone’s credit while they get back on their feet.