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Rent vs. Buy Calculator

This Rent vs. Buy Calculator compares the long-term cost of renting versus buying a home in Canada. It estimates mortgage payments, property tax, insurance, maintenance and mortgage loan insurance for the buying scenario and compares them with your rent payments over the same period. The result shows total net cost, average monthly cost, and which option is likely better over your chosen time horizon.

Home purchase

Expected value growth rates (optional)

Home rent

How this Rent vs Buy Calculator works

This calculator builds two parallel scenarios over your chosen loan term: one where you buy a home and one where you continue renting. It tracks yearly cash flows and home equity and then compares the net cost and average monthly cost of each option.

Buying scenario

  • Your home price and down payment (% or $) determine the mortgage principal. The interest rate and loan term are used to calculate a fixed monthly payment using standard amortization.
  • If your down payment is less than 20% and the home is eligible for mortgage loan insurance, the calculator estimates a mortgage loan insurance premium based on your loan-to-value ratio, adds it to the mortgage amount, and shows it as a separate line in the summary.
  • Each year the calculator adds your mortgage payments, property tax, insurance and maintenance to get total cash outflows.
  • The property value growth rate (if provided) is applied to estimate future home value. Subtracting the remaining mortgage balance from this value gives your home equity.
  • The net cost of buying at each year is: total cash outflows minus home equity. If you tick This is my first home purchase, the model subtracts a simple estimate of the federal first-time home buyer tax credit once.

Renting scenario

  • The calculator starts with your monthly rent and converts it to annual rent.
  • If you enter a Rent growth rate (%), rent increases by that percentage each year; otherwise it grows by Rent increase (% / year).
  • Rent insurance ($ / year) is added annually on top of rent, and any security deposit is added to the first year's cost.
  • The net cost of renting at each year is simply the total rent and rent insurance paid (plus deposit) up to that point.

Average monthly cost and “better after X years”

  • For each year, the calculator divides cumulative net cost by the number of months so far to get the average monthly cost of buying and renting. These values are plotted on the chart “Average monthly cost - Rent vs Buy”.
  • The summary shows which option has the lower net cost over the full term and, when possible, an approximate point where one option becomes better than the other (for example, “Buying is better after about 8 years”).

Canadian federal minimum down payment rules

In Canada, federal rules set a minimum down payment based on the home price:

  • 5% of the purchase price for homes up to $500,000
  • 5% of the first $500,000 plus 10% of the portion above $500,000 for homes between $500,000 and $1.5 million
  • 20% of the purchase price for homes of $1.5 million or more

If your down payment is less than 20% and your home price is within the insurable range, lenders typically require mortgage loan insurance. The fee (premium) is a percentage of your mortgage amount and can usually be added to the mortgage balance.

For the latest official details, see the Government of Canada - minimum down payment and mortgage loan insurance.

Frequently Asked Questions (FAQs)

Is it better to rent or buy a house in Canada?

Whether renting or buying is better depends on your financial situation, lifestyle, and local market conditions. Buying typically makes more sense if you plan to stay in one location for at least 5-7 years, have stable income, and can afford the down payment and ongoing costs. Renting offers more flexibility and lower upfront costs, making it better for those who may relocate frequently or aren't ready for homeownership responsibilities. Use this calculator to compare the actual costs over your specific timeframe.

How much down payment do I need to buy a home in Canada?

The minimum down payment in Canada depends on the home price: 5% for homes up to $500,000; 5% on the first $500,000 plus 10% on the portion above $500,000 for homes between $500,000 and $1.5 million; and 20% for homes priced at $1.5 million or more. With less than 20% down, you'll need mortgage loan insurance, which adds to your total cost.

What is mortgage loan insurance and when do I need it?

Mortgage loan insurance (often called CMHC insurance) is required in Canada when your down payment is less than 20% of the home price. The insurance premium is a percentage of your mortgage amount (typically 2.8% to 4% depending on your loan-to-value ratio) and protects the lender if you default. The premium can usually be added to your mortgage balance rather than paid upfront.

What additional costs should I consider when buying a home?

Beyond your mortgage payments, budget for property taxes, home insurance, maintenance and repairs (typically 1-2% of home value annually), utilities, and potential condo fees. You'll also face one-time closing costs including legal fees, land transfer tax, home inspection, and appraisal fees. These ongoing and upfront costs can significantly impact whether buying makes financial sense compared to renting.

How does property value growth affect the rent vs buy decision?

Property value growth (or appreciation) builds equity for homeowners, making buying more attractive over time. If your home appreciates at 2-3% annually while rents increase at a similar or higher rate, buying typically becomes advantageous after 5-10 years. However, appreciation isn't guaranteed and varies by location and market conditions. This calculator lets you input expected growth rates to see how they impact your decision.

At what point does buying become cheaper than renting?

The break-even point varies based on home price, interest rates, rent levels, and local market conditions. Generally, buying becomes cheaper than renting after 5-10 years when you factor in equity buildup and property appreciation. The calculator shows a year-by-year breakdown and identifies approximately when buying becomes the better financial option in your specific scenario.

Should I include my first-time home buyer benefits in the calculation?

Yes, if you're a first-time home buyer in Canada, check the "This is my first home purchase" box. The calculator will factor in an estimate of the federal first-time home buyer tax credit, which can reduce your overall cost of buying. Additional provincial programs and rebates may also be available depending on your location.

How do rising interest rates affect the rent vs buy comparison?

Higher interest rates increase your monthly mortgage payments and the total interest paid over the loan term, making buying more expensive and potentially tilting the decision toward renting in the short term. However, if you secure a fixed-rate mortgage, your payments remain stable while rents typically continue to increase annually. Enter different interest rate scenarios in the calculator to see how rate changes impact your decision.

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