How To Use This Rent Vs. Own Calculator
- Enter your rent. Add your monthly rent and how much you expect it to go up each year.
- Enter the home you'd buy. Add the price, your down payment, the mortgage rate and the amortization.
- Choose how long you'll stay. Buying has large costs at the start and at the end, so the number of years you keep the home changes the answer more than anything else.
- Check the assumptions. Property tax, upkeep, insurance, closing and selling costs, how fast home prices change (they can also fall) and what your savings would earn all have starting values you can change.
- Read the result. You'll see which option leaves you better off, by how much, and the year buying pulls ahead. The tables under the calculator show net worth and costs year by year.
How The Calculator Compares Renting And Buying
Comparing rent with a mortgage payment leaves out most of the picture. The calculator follows your money instead:
- If you buy, you pay the mortgage, property tax, upkeep and home insurance. When you sell, you keep the sale price minus selling costs and what you still owe on the mortgage.
- If you rent, you invest the down payment and closing costs instead. Each month, whichever option costs less invests the difference.
- The result compares the two net worths in every year, and the break-even year is the first year buying comes out ahead.
Example: Buying a $550,000 home with $110,000 down at 4.5% leaves you about $26,008 better off after 10 years than renting at $2,200 a month and investing the difference at 5% a year. Buying pulls ahead in year 8.
With less than 20% down, the calculator adds CMHC mortgage loan insurance to the mortgage: 2.80% of the loan with 15% to 19.99% down, 3.10% with 10% to 14.99% down and 4.00% with 5% to 9.99% down.
The 5% Rule For Renting Vs. Buying
A quick rule of thumb: if a year of rent costs less than about 5% of the price of a similar home, renting and investing the difference often comes out ahead. If it costs more, buying often does. In the example, $2,200 a month is $26,400 a year, or 4.8% of $550,000, so the two are close and the result depends on how long you stay.
The rule is a starting point. Interest rates, how fast rents and home prices rise, and what your savings would earn all move the line, which is why the calculator works it out year by year.
Is Renting Throwing Money Away?
A common argument for buying is that rent is money you never get back. But owning has costs you never get back too. Portfolio manager Ben Felix of PWL Capital calls them the unrecoverable costs of owning a home, and they're where the 5% rule comes from:
- Property tax: about 1% of the home's value a year.
- Maintenance: about 1% a year.
- Cost of capital: about 3% a year, the mortgage interest you pay plus what your down payment could have earned if you'd invested it.
Together, that's about 5% of the home's price a year. If your rent costs less than that and you invest the difference, renting can leave you as well off as buying. In this video, Felix updates his rent vs own research with 2025 data for twelve Canadian cities:
Home Prices Can Fall
Buying isn't a sure win. As of December 2025, Canada's home prices after inflation were 28% below their peak, the second-largest drop since 1975 after the 1980s, when they fell 31% (Ben Felix, PWL Capital, February 2026). To see what a flat or falling market does to the answer, set the home value change in the calculator's assumptions to 0% or below, for example -2%.
The comparison also assumes you actually invest what you save by renting. If that money gets spent instead, buying often comes out ahead, because every mortgage payment builds equity whether you plan to save or not.
What Buying A Home Costs In Canada
- Down payment. At least 5% of the first $500,000 of the price plus 10% of the part between $500,000 and $1.5 million. Homes of $1.5 million or more need 20% down. With less than 20% down, you also pay mortgage loan insurance.
- Closing costs. Usually 2% to 4% of the price: land transfer tax, legal fees, title insurance, a home inspection and adjustments. See budgeting for closing costs.
- Mortgage payments. Part interest and part principal. The principal you pay down becomes equity.
- Property tax. Set by your municipality and based on your home's assessed value. Some lenders collect it with your mortgage payment.
- Maintenance and repairs. A common rule is to budget about 1% of the home's value a year.
- Home insurance. Your lender will ask for proof of coverage before closing.
- Selling costs. When you sell, real estate commission and legal fees often come to around 5% of the price.
What Renting Costs
- Rent, which usually goes up over time. How much your landlord can raise it each year depends on your province and the unit.
- Tenant insurance, which many landlords require.
- Moving costs when a lease ends or rent goes up more than you can afford.
Tenant rights and responsibilities across Canada
Benefits Of Renting
- No down payment or closing costs. The money stays available to invest or keep as an emergency fund.
- Flexibility. You can move when your lease ends, without the cost and paperwork of selling a home. Learn how to end a lease in Canada.
- Fewer surprise costs. Your landlord usually pays for major repairs.
Benefits Of Buying
- Equity. Each payment pays down your mortgage, and you keep any rise in the home's value when you sell. Over time this can be one of the biggest parts of your net worth.
- Stable housing costs. A fixed-rate mortgage payment doesn't rise with the market during its term, and once the mortgage is paid off, you stop paying it.
- Control. You decide how long you stay and how you use, change and renovate the home.
- Rental income. A basement suite or a spare room can help cover the mortgage.
When Should You Rent Vs. Buy?
Renting may make more sense if:
- You may move within a few years
- You don't yet have the down payment and closing costs, or an emergency fund on top of them
- A year of rent costs well under 5% of the price of a similar home
- You'd rather invest your savings than tie them up in one property
Buying may make more sense if:
- You plan to stay past the break-even year the calculator shows
- You can afford the payments with room to spare and qualify for a mortgage
- A year of rent costs more than about 5% of the price of a similar home
- You want stability and control over your home
