Rent vs Buy Calculator

Renting vs Buying in Canada: How to Compare Them Fairly

Buying is not automatically better than renting. In expensive markets such as Toronto and Vancouver, home prices are so high relative to rents that renting and investing the difference can leave you wealthier after a decade. The only fair comparison is between the two positions you would actually hold at the end: the buyer owns a home and still owes part of the mortgage, while the renter owns an investment portfolio built from the down payment plus whatever renting saved each month.

That is what this calculator compares. For the buyer it takes the home’s value after the chosen number of years, grown at your appreciation rate, and subtracts the mortgage balance still owed (Canadian semi-annual compounding, 25-year amortization, CMHC premium added to the loan when you put down less than 20%). For the renter it invests the down payment on day one and adds the monthly difference between owning costs and rent, compounding at your investment return. If owning turns out cheaper than renting, the buyer invests that gap instead.

Worked Example: $600,000 Home vs $2,200 Rent Over 10 Years

Buying comes out about $27,000 ahead here, and the margin is fragile. At 2% appreciation instead of 3%, the home is worth $731,397 and the buyer’s equity falls to $327,473, so renting wins by about $48,000. Over a 5-year horizon the buyer is only $16,000 ahead before paying any selling costs.

What the comparison leaves out matters too. Land transfer tax and other closing costs (commonly 1.5–4% of the price) and a realtor commission of roughly 3–5% when you sell all come out of the buyer’s side, which is why buying rarely pays off if you expect to move within five to seven years. Rent usually rises over time while a fixed mortgage payment does not, which works the other way over long horizons. When judging affordability, CMHC caps housing costs at 39% of gross income (the gross debt service ratio) for an insured mortgage.