Rent vs. Buy Calculator Canada
Break-even analysis with opportunity cost of down payment — the gap every other calculator misses.
Buying side
Closing costs include LTT, legal fees, HST on services (~3% total). Selling costs include realtor commission + legal (~5%).
Renting side
Shared assumptions
▶ Why we include the opportunity cost of the down payment
The field's biggest math gap: most rent-vs-buy calculators compare mortgage payments to rent payments and declare a winner. This is wrong because it ignores what the renter does with the money they didn't spend on a down payment.
If you put $150,000 down on a house, you've tied up $150,000 that could have been invested in a diversified portfolio earning ~7%/year. Over 10 years, that $150,000 grows to approximately $295,000. The buyer builds equity too — but only through appreciation and mortgage paydown.
How we model it:
- Renter net worth = down payment invested at market return + any monthly savings invested (if renting is cheaper month-to-month)
- Buyer net worth = home value − remaining mortgage − selling costs + any monthly savings invested (if buying is cheaper month-to-month)
The "break-even year" is when buying's net worth curve finally crosses the renter's curve. Before that crossover, the renter is ahead on a total-wealth basis.
Net Worth Over Time: Buy vs Rent — includes opportunity cost of down payment
About the Canadian Rent vs Buy Calculator
Why most rent vs buy calculators are wrong
The most common mistake: they compare the cash flow of renting vs buying — "your mortgage is $2,800/month and rent is $2,200/month, so renting saves you $600/month." That's not the right comparison. The right question is about net worth after N years, which requires accounting for what the renter does with their down payment and monthly savings.
A $150,000 down payment is $150,000 that doesn't go into the stock market. If invested in a 60/40 balanced portfolio returning 7%/year, it grows to approximately $295,000 over 10 years. The buyer builds equity through appreciation and mortgage paydown — but does that beat $295,000 in the renter's portfolio? That's the question this calculator answers.
Renting vs buying: side-by-side
Every factor below is already modelled somewhere in this calculator's inputs or math — this table just lays them out for quick scanning before you dive into the numbers.
| Factor | Renting | Buying |
|---|---|---|
| Upfront cash | Security deposit, first/last month's rent — typically one to two months' rent | Down payment (min. 5%–20%+) plus closing costs (~3%: LTT, legal fees, HST on services) |
| Monthly cost | Rent + renter's insurance (~$20/mo) | Mortgage payment + property tax + home insurance + maintenance (+ condo fees if applicable) |
| Cost growth | Rent increases yearly (~3%/yr planning default; provincial guidelines vary, e.g. Ontario 2025 at 2.5%) | Mortgage payment fixed for the term; property tax, insurance, and maintenance drift with home value |
| What builds wealth | The money not spent on a down payment, invested and compounding (the opportunity cost this calculator tracks) | Home equity from mortgage paydown + price appreciation, net of selling costs when sold |
| Flexibility | Can relocate at lease-end with no selling process | Selling costs (~5%: realtor commission + legal) apply any time the home is sold |
| Maintenance responsibility | Landlord's responsibility — not the renter's cost | Owner's responsibility — modelled at ~1%/yr of home price by default |
| Tax treatment | No tax implications on rent paid | Mortgage interest is not tax-deductible in Canada, but capital gains on a principal residence are tax-exempt |
| Risk exposure | Exposed to rent increases and the investment portfolio's market risk | Exposed to home-value declines, rate-renewal risk (fixed rate assumed here), and concentration in one asset |
The break-even year: what it means
The break-even year is when the buyer's total net worth (home equity after selling costs) first surpasses the renter's total net worth (invested portfolio). Before the break-even year, the renter is ahead in total wealth. After it, the buyer is ahead. If you plan to stay longer than the break-even year, buying likely makes more financial sense. Shorter, and renting wins on a pure numbers basis.
For standard Canadian inputs (20% down on a $750k home, 4% appreciation, 7% investment return), the break-even year typically falls between year 7 and 12. This matches the general "stay at least 5–7 years if you buy" rule of thumb.
Canadian-specific costs included
Closing costs (~3%): Ontario Land Transfer Tax runs approximately 0.5%–2% on home price, plus Toronto's additional municipal LTT (~0.5%–2.5%), legal fees (~$1,500–$2,500), title insurance, and HST on services. BC charges 1% on first $200k, 2% on $200k–$2M. Alberta has no LTT (only small flat fees). We use 3% as a reasonable national average.
Selling costs (~5%): Realtor commissions in Canada typically run 3–5% of sale price (split between buyer's and seller's agents). Add legal fees at sale and there's a clear 4.5–6% total selling cost. We default to 5%.
CMHC mortgage insurance: If your down payment is less than 20%, CMHC insurance is required. At 5% down, the premium is 4% of the loan amount — added to the mortgage principal. This increases monthly payments and slows equity building, pushing the break-even year later.
The biggest sensitivity driver: investment return assumption
Changing the investment return from 5% to 9% can shift the break-even year by 3–5 years. If you believe markets will return 10%+ (S&P 500 historical average), renting + investing looks significantly better. If you believe 5% is more realistic (bond-heavy portfolio), buying looks better sooner. This is the single most important assumption — model it at multiple rates to see the range.
What this calculator does NOT model
- Tax deductibility of mortgage interest: In Canada, mortgage interest on your principal residence is NOT tax-deductible (unlike the US). No adjustment needed here.
- Principal residence exemption: Capital gains on the sale of your principal residence are exempt from tax. Appreciation in this model is therefore pre-tax for the buyer.
- Non-financial value of homeownership: Stability, ability to renovate, pets, pride of ownership. These are real and important — but not quantifiable here.
- Variable-rate mortgages: We assume a fixed rate throughout. Rates will renew at unknown future rates.
City-specific inputs: property tax varies more than you'd think
This calculator's home price, rent, and property tax fields are national reference points, not one-size-fits-all defaults — property tax rates in particular vary widely enough by municipality that plugging in your own city's rate materially changes the result. Swap in your local numbers before trusting the verdict:
| City | Approx. property tax rate |
|---|---|
| Vancouver | ~0.27% of home value/yr |
| Toronto | ~0.67% of home value/yr |
| National default (used above) | ~1.00% of home value/yr |
| Winnipeg | ~2.60% of home value/yr |
Rates are approximate and set by each municipality annually — confirm the current rate for your specific property before relying on it. Source: municipalities / CREA 2025 (see Data sources below).
Data sources & methodology
All defaults on this page trace back to a named public source rather than an internal estimate:
- CREA (Canadian Real Estate Association) — national average home price default (~$750,000, 2025) and long-run home appreciation reference (historically ~5–6%; this calculator defaults to a more conservative 4%).
- CMHC (Canada Mortgage and Housing Corporation) — mortgage default-insurance premium schedule (2.80%–4.00% of loan amount by down-payment tier), maintenance rule-of-thumb guidance (~1%/yr of home value), and the Rental Market Report used for the national average rent reference.
- Bank of Canada / Ratehub — mortgage interest rate default (6.09%, posted 5-yr conventional, July 2026).
- PWL Capital / S&P 500 historical data — investment return default (7% for a 60/40 balanced portfolio; S&P 500 historical average ~10.5% shown for context in the input tooltip).
- Municipalities / CREA — city-level property tax rates (Toronto, Vancouver, Winnipeg) shown above and in the property tax field's tooltip.
- Interest Act (R.S.C. 1985, c.I-15, s.6) — semi-annual compounding used for the mortgage payment calculation, matching the same engine as the Mortgage Calculator.
Rates and averages shown reflect the most recent publicly available data at the time this page was last updated (see the "Data updated" line near the top of the page). Housing markets and interest rates move — treat every default as a starting point to replace with your own numbers, not a forecast.
Not financial advice. This calculator provides estimates for informational and educational purposes only. Housing markets, interest rates, and investment returns are unpredictable. Always consult a licensed financial planner or mortgage broker before making housing decisions. Calculations run entirely in your browser — no data is sent to any server.
Related calculators
- Mortgage Calculator (Canada) — Accurate Canadian mortgage payment with semi-annual compounding, CMHC, stress test.
- Canadian Income Tax Calculator — Find your marginal rate to use in this calculator.
- Investment Projection — See how the renter's invested portfolio grows over time.
Frequently asked questions
What does this rent vs buy calculator include that others miss?
The opportunity cost of the down payment. Most calculators just compare a mortgage payment to a rent payment and stop there. This tool instead tracks what the renter's down payment (plus closing costs they never pay) would grow to if invested in a diversified portfolio, and compares that total net worth to the buyer's home equity after selling costs. That single factor is the biggest reason rent-vs-buy conclusions swing between calculators.
How is the break-even year calculated?
Each year, buyer net worth (home value minus remaining mortgage balance minus selling costs, plus any monthly surplus invested) is compared to renter net worth (invested down payment and closing costs, plus any monthly surplus invested). The break-even year is the first year the buyer's net worth overtakes the renter's. Before that year, renting plus investing is ahead on a total-wealth basis; after it, buying is ahead.
What counts as the "true cost" of buying in this calculator?
On top of the mortgage payment itself, the buying side includes property tax, home insurance, and maintenance (all entered as annual dollar figures, with defaults of roughly 1% of home price for property tax and maintenance, and roughly 0.5% for insurance), plus one-time closing costs (default 3%, covering land transfer tax, legal fees, and HST on services) and selling costs when the home is eventually sold (default 5%, covering realtor commission and legal fees). CMHC insurance is added automatically whenever the down payment is under 20%.
What does this calculator NOT account for?
It does not model mortgage interest deductibility, because interest on a Canadian principal residence is not tax-deductible in the first place — so no adjustment is needed. It also doesn't tax the buyer's home-value appreciation, since gains on a principal residence are exempt from capital gains tax under the Principal Residence Exemption. It leaves out the non-financial value of owning (stability, ability to renovate, pets) since that isn't quantifiable, and it assumes a fixed mortgage rate for the full analysis rather than modelling a variable rate or renewal at an unknown future rate.
What is the biggest assumption I should double-check?
The investment return rate used for the renter's portfolio. Shifting that assumption from a lower, bond-heavy return to a higher, equity-heavy return can move the break-even year by several years, because it compounds every year of the analysis. Test a range of return assumptions you actually believe in rather than relying on the default.
Does this rent vs buy calculator account for city-specific costs like Toronto or Vancouver?
Yes, through the inputs rather than a fixed default: property tax rates alone vary from roughly 0.27% of home value in Vancouver to roughly 0.67% in Toronto to roughly 2.6% in Winnipeg, so the annual property tax field should be adjusted to your municipality rather than left at the national ~1% default. Home price and monthly rent should also be set to your local market — the $750,000 home price and $2,500 rent are Canada-wide reference points, not city-specific figures. Because the calculator is input-driven, entering your city's actual numbers reproduces a city-specific analysis without needing a separate page per city.
How do condo or strata fees change the rent vs buy math?
Condo/strata fees are added on top of the mortgage payment, property tax, insurance, and maintenance in the monthly buying-side cost — and unlike maintenance, they are not optional or deferrable, so they directly reduce the monthly surplus available to invest. A $600–$900/month fee (common in many Canadian condo buildings) can be the single biggest cost this calculator would otherwise miss if left at the default $0, and it pushes the break-even year later because it makes buying more expensive every month of the analysis. Leave the field at $0 for a house or freehold townhome; set it explicitly for any condo or strata purchase.