Abstract: The purpose of this study is to explore the effects of farmer differentiation and urban housing on farmers’ willingness of rural residential land paid-exit by the investigation of 483 rural households in 16 administrative villages of Wuhan Metropolitan Area. The methods of descriptive statistical analysis and Logistic model analysis are used. The results show that (1) farmer differentiation has a positive effect on farmers’ willingness of residential land paid-exit, and the more the degree of farmer differentiation is, the more obvious the positive effect is. (2) The impact of the urban housing residential effect on rural households’ willingness has significant positive impact, and the urban housing wealth effect has a significant negative impact. The overall impact is positive. (3) The impact of urban housing on farmers’ willingness of residential land paid-exit with different levels of farmer differentiation is significantly different. From the pure rural households to non-agricultural households, the promotion of urban housing has gradually strengthened, while the impact of urban housing has a “bottleneck period” in some farmer differentiation sample groups. In conclusion, in order to promote rural households’ participation in rural residential land paid-exit, the government should continue to promote the development of rural non-agricultural economy, and improve rural households’ non-agricultural employment level. Besides, the present quittance policy should be long-term matched with house-site security policies. Only if the basis of providing non-agricultural economic bases and social security conditions for rural households through social overall institutional arrangements is formed, the work of rural residential land paid-exit will be carried out in an orderly manner.