This book focuses on the choice of owning versus renting. A life-cycle framework is proposed, where a ?nitely lived risk averse agent can choose between owning and renting a house, and is exposed to two sources of uncertainty: house price and labor income. The ?rst chapter analyzes two alternatives for renting a given house: (i) a long term ?xed-price rent contract, and (ii) a rent contractthat is fully adjustable to house prices.Alternatively, the agent can buy the house borrowingat the risk free rate. The equilibrium long term?xed-price rent and the adjustable rent are derived,such that the agent is indifferent ex ante betweenowning and renting. The second and the third chapterinvestigate how the choice of owning a house isaffected by taking a mortgage contract that has arisk of default. Lenders price the mortgage, charginga default premium to compensate themselves forexpected losses due to default on the mortgage. As aresult, the cost of mortgage has a major impact onthe owning decision. Moreover, the adjustable rent isderived, such that the agent is indifferent ex antebetween owning and renting.