Rent vs Buy Calculator

The rent vs buy calculator compares where you end up financially if you buy a home versus rent a similar one and invest the difference. The answer depends on your numbers: local prices and rents, the mortgage rate, how long you stay and what your investments earn. This page is part of the home buying process guides.

How this rent vs buy calculator works

Buying inputs: home price, down payment and mortgage rate; property tax, home insurance and maintenance; buying costs (land transfer tax, legal fees) and selling costs (mostly real estate commission); and expected price growth.

Renting inputs: monthly rent and annual rent increases, and the return on invested money.

Each month, whichever option costs less invests the difference. The renter also invests the down payment and the money the buyer spent on buying costs. At the end, the buyer’s position is the home’s value after selling costs, minus the remaining mortgage, plus any invested savings; the renter’s is the investment portfolio. The mortgage payment uses semi-annual compounding, as Canadian fixed-rate mortgages do, over 25 years, and stops once the mortgage is paid off. Property tax and insurance rise 2% a year, and maintenance is a percentage of the home’s value each year.

Key factors that determine the outcome

Factors that favour buying

• Low mortgage rates: lower carrying costs
• High home price growth: the home grows faster than the renter’s investments
• Long time horizon: more time to recover buying and selling costs and build equity
• High rent relative to prices
• Forced saving: mortgage payments build equity automatically

Factors that favour renting

• High prices relative to rents
• Short time horizon: buying and selling costs need years to recover
• High mortgage rates: more of each payment goes to interest
• Strong investment returns relative to home price growth
• Low rent, especially in a unit covered by rent increase limits

The break-even timeline

The biggest drag on buying for a short stay is transaction costs: land transfer tax and legal fees when you buy, and commission and legal fees when you sell. Round-trip costs often reach 5% to 8% of the price; on a $700,000 home that’s $35,000 to $56,000, before mortgage interest, property tax, maintenance and insurance. Alberta and Saskatchewan charge only small land titles fees instead of a land transfer tax, so buying costs there are lower.

How many years it takes to come out ahead depends on price growth, the mortgage rate and the rent. Set the time horizon in the calculator to see it for your numbers.

The price-to-rent ratio

The price-to-rent ratio is a quick way to compare prices with rents in a market:

Formula: home price ÷ (monthly rent × 12)

A common rule of thumb reads a ratio under 15 as favouring buying, 15 to 20 as roughly neutral, and above 20 as increasingly favouring renting.

Canadian examples (each board’s latest typical home price, and the average asking rent for a three-bedroom rental in the second quarter of 2026):

Prices are each board’s benchmark (Montreal: APCIQ’s average, total sales volume divided by number of sales); rents are Statistics Canada’s average asking rents for three-bedroom units. A rental is rarely an exact match for the home you’d buy, so treat these as rough. The housing market and rent pages have more detail.

The hidden costs of buying

The closing costs calculator and land transfer tax calculator give exact figures for your province.

The renting and investing strategy

Renting comes out ahead only if the money a buyer would have tied up is actually invested:

1. The down payment is invested, for example in a TFSA or RRSP.
2. The monthly difference between owning and renting costs is invested.
3. Contributions happen automatically.
4. The investments are low-cost and diversified.

Example: instead of a $100,000 down payment on a $500,000 home, a renter invests the $100,000 and saves $800 a month (the difference between rent and total owning costs). At 7% a year for 20 years, the $100,000 grows to $386,968 and the monthly savings to $406,029, about $792,998 in total, before tax if held outside a TFSA or RRSP. Whether that beats the buyer’s equity depends on the home’s price growth; the calculator compares both.

When buying tends to make sense

• You expect to stay in the same city for many years
• You value the stability and control of owning
• Your mortgage payments plus other owning costs are close to the rent for a similar home
• You have an emergency fund and no high-interest debt
• You qualify comfortably within the debt service ratios

Should you try to time the market?

Many people asking “when should I buy?” are really asking whether to wait for prices or rates to drop. Nobody predicts either reliably, and prices in the same period have moved differently from city to city. Personal readiness is easier to judge: a saved down payment, debt ratios within limits, stable income and a plan to stay put for years.

Rates are the one part of timing you can partly manage. A mortgage pre-approval usually holds a rate for 90 to 120 days, which protects you if rates rise while you shop. The Bank of Canada rate history shows how the policy rate has moved.

Tax advantages of home ownership in Canada

Principal residence exemption. A gain on your principal residence is generally tax-free when you sell. On a $200,000 gain, half ($100,000) would otherwise be taxable income, which at marginal rates of about 25% to 54% is roughly $25,000 to $54,000 of tax avoided.

First Home Savings Account (FHSA). Contributions are deductible and a qualifying withdrawal is tax-free; you can contribute up to $40,000 over your lifetime. See the FHSA calculator.

Home Buyers’ Plan (HBP). Withdraw up to $60,000 from your RRSP tax-free for a first home, repaid over 15 years.

GST/HST New Housing Rebate. Refunds part of the GST (or the federal part of the HST) on a newly built home; the federal rebate phases out for homes priced between $350,000 and $450,000.

Renters have no equivalent exemption: investment gains outside a TFSA or RRSP are taxable, and TFSA and RRSP room is limited.

Rent increase limits

Several provinces limit how much rent can rise for a sitting tenant:

Alberta, Saskatchewan and Newfoundland and Labrador set no percentage limit, so landlords can raise rent by any amount with proper notice; long-term rent there is harder to predict.

The 5% rule: a quick shortcut

A popular rule of thumb: multiply the home’s value by 5% and divide by 12 to get a break-even monthly rent. Rent below that figure suggests renting is cheaper; rent above it suggests buying.

Example: $600,000 × 5% = $30,000 a year, or $2,500 a month.

The 5% stands for the main unrecoverable costs of owning: about 1% property tax, about 1% maintenance, and about 3% cost of capital (mortgage interest plus the return the down payment could earn elsewhere). It’s a starting point; the calculator above uses your actual numbers.

Related calculators

• Closing costs
• Principal residence exemption
• Capital gains when selling a home
• Mortgage Calculator: payments for any scenario
• Mortgage Affordability Calculator: how much house you can afford
• Closing Costs Calculator: the upfront costs of buying
• Land Transfer Tax Calculator: provincial land transfer tax
• Rent Affordability Calculator: the most rent you can afford
• Investment Calculator: project the renting and investing strategy
• TFSA Calculator: tax-free compounding in a TFSA