Rent vs Buy in Canada: Calculator and the Assumptions That Decide It
The mortgage around this calculator is the Canadian mortgage guide. How a payment is built, and what an extra payment does to the same loan, is the prepayment calculator. Cash due on top of the down payment, including land transfer tax, is the closing cost guide. If the “buy” case is a rental rather than a home you will live in, stop and read primary residence versus rental, because this tool does not deduct interest or charge capital gains.
- The mortgage uses semi-annual compounding, not in advance. On $560,000 at 4.50 percent over 25 years the payment is $3,099.45 a month.
- The renter invests the down payment plus buying costs, then invests any month in which owning costs more than rent, at the return you type.
- Property tax and maintenance are a percent of that month’s home value. Insurance stays a flat annual amount. Selling costs come off the home at the end.
- Loaded result, 10 years: buyer net $404,342.54, renter portfolio $438,490.23, buyer behind by $34,147.69. Home value $853,296.09. Mortgage left $406,288.75. Selling costs $42,664.80.
- A second illustration, $500,000 with $100,000 down, 4 percent, five years, $2,500 rent, finishes with buying ahead by $45,173.00. The assumptions did the work.
Does buying finish ahead of renting?
Only after you have typed a price, a down payment, a contract rate, a stay, and a set of costs you believe. The tool will not look up a city’s property tax, a neighbourhood’s rent, or this month’s discounted mortgage rate. The 4.50 percent in the box is the same illustrative rate the mortgage guide uses so the arithmetic can be checked. It is not a rate on offer in September 2026.
Rent versus buy
Every rate below is an assumption you can change. The mortgage uses Canadian semi-annual compounding. The renter invests the down payment, the buying costs, and any month where owning costs more than rent. If rent costs more, that difference comes out of the renter's portfolio.
-$34,147.69
Buyer's ending wealth minus the renter's portfolio. Positive means buying finishes ahead on these assumptions. Mortgage payment $3,099.45 a month on $560,000.00.
| Buyer net after selling costs and the remaining mortgage | $404,342.54 |
|---|---|
| Renter portfolio | $438,490.23 |
| Home value at the end | $853,296.09 |
| Mortgage still owing | $406,288.75 |
| Selling costs | $42,664.80 |
| Rent paid over the whole stay | $371,271.08 |
| Cash the owner put in, including the down payment | $668,895.42 |
What is each assumption doing?
| Input | Loaded illustration | What it affects |
|---|---|---|
| Price and down payment | $700,000 and $140,000 | The mortgage starts at $560,000. The renter invests the $140,000. |
| Rate and amortization | 4.50 percent, 25 years | Monthly rate is (1 + 0.045 / 2) raised to 1/6, minus 1. Payment $3,099.45. |
| Years you will stay | 10 | Selling costs land at month 120. A short stay makes those costs dominate. |
| Appreciation | 2 percent a year | Home value compounds monthly. It is not a housing forecast. |
| Property tax and maintenance | 0.6 percent and 1 percent of current value | Charged every month on that month’s value, so they rise with appreciation. |
| Insurance | $1,800 a year, flat | Does not rise. If your premium will rise, type a higher number. |
| Buying costs | $15,000 | Added to the owner’s cash and to the renter’s starting portfolio. Land transfer tax is the large piece in many cities. Look it up. Do not reuse $15,000. |
| Selling costs | 5 percent of the ending value | $42,664.80 on the loaded ending value. Commission and legal fees vary. |
| Rent and rent growth | $2,800 a month, 2 percent | Rent compounds monthly. Total rent paid in the illustration is $371,271.08. |
| Return on the difference | 5 percent a year | The renter’s portfolio compounds monthly, then adds owning-minus-rent. If rent is higher, the portfolio shrinks by the gap. |
Table as of the calculator’s rules, September 2026. The dollar results are the output of these inputs, not a market study. Owner cash over the whole stay, including the down payment and buying costs, is $668,895.42 in the loaded case. That number is not the buyer’s wealth. Wealth is the home, minus selling costs, minus the mortgage that is left.
Price $500,000. Down payment $100,000. Rate 4 percent. Amortization 25 years. Stay 5 years. Appreciation 3 percent. Property tax 1 percent. Maintenance 1 percent. Insurance $1,500. Buying costs $10,000. Selling costs 4 percent. Rent $2,500 growing at 3 percent. Investment return 4 percent. Payment $2,104.08. Buyer net $208,235.85. Renter portfolio $163,062.85. Buying ahead by $45,173.00. Same tool, different assumptions, opposite sign. Do not quote either gap as “the” Canadian answer.
What is left out, on purpose?
- CMHC premiums. A down payment under 20 percent usually means default insurance. The premium is borrowed and added to the mortgage. This tool does not add it. The CMHC guide is the premium schedule. The loaded case is exactly 20 percent down so the question does not arise.
- The stress test and whether you qualify. Qualifying is the stress test. This page assumes the mortgage exists.
- Tax on a sale, and tax on the renter’s portfolio. A principal residence is often sheltered by the principal residence exemption. A non-registered portfolio is not. If the renter’s return is inside a TFSA, the untaxed return is the right input. If it is not, type a lower after-tax return. The tool will not compute the tax.
- Repairs that are not a smooth percent, condo fees, and utilities that differ between the apartment and the house. Put the difference into maintenance or into rent. A smooth 1 percent is a modelling choice, not a building standard.
- Leverage risk. A 2 percent decline instead of 2 percent appreciation changes the buyer’s net by more than 2 percent, because the mortgage does not shrink when the price does. Run a zero, and a negative, before you treat the first result as a decision.
Frequently asked questions
Is a lower monthly payment a reason to buy?
No. The owner’s monthly cash includes principal, which is savings, and also tax, maintenance, and insurance, which are not. The renter keeps the down payment invested. Comparing $3,099.45 with $2,800 and stopping there ignores both the principal and the $155,000 the renter invested on day one in the loaded case.
Why does the payment not match a US mortgage calculator?
US calculators usually convert the annual rate by dividing by 12. This one uses (1 + annual rate / 2) to the power of 1/6, minus 1, which is the semi-annual convention Canadian residential mortgages are quoted on. The mortgage guide uses the same conversion. A $500,000 loan at 4.50 percent over 25 years is $2,767.36 a month here. The guide rounds that payment to $2,767.
Should appreciation be the average house-price increase?
Only if you are willing to bet your down payment on that average holding for your house, in your years. This page does not publish a national appreciation rate. Two percent and three percent appear above because they are the inputs that produce the two checked outputs. Replace them.
Where do closing costs go?
Into the buying-costs box, as a dollar amount, not as a percent of the price. Land transfer tax is provincial and, in Toronto, municipal on top. The closing-cost guide is the map. The $15,000 in the box is a placeholder so the formula has a number. It is not Toronto’s tax on a $700,000 purchase.
What return should the renter use?
The after-tax return you would actually earn on that down payment for the years you would rent. A TFSA can take the pre-tax return you believe. A taxable account cannot. Five percent in the loaded case is an assumption, not a balanced-fund promise. If you would leave the money in a savings account, type the savings rate.
Does this work for a five-year stay?
Yes. Shorten the years. Selling costs then hit a home that has not appreciated for long, which is why the second illustration still needed 3 percent appreciation and a 4 percent selling cost to finish ahead. Run your own stay before you waive a condition.
Sources
- Canadian mortgage guide — the semi-annual payment convention used here, and the illustrative 4.50 percent payment on $500,000.
- FCAC: mortgages
- Land transfer tax and closing costs
The sign on the comparison is only as good as the rate and the tax.
Interest on the home you live in is not deductible. The filing side of a move, a sale, or a rental is the 2026 tax guide.
Get the 2026 Tax Guide — $49 CAD
