Rent vs Buy

Renting looks cheaper every month until you run the full ledger. Buying looks like forced savings until you add the interest, tax, fees, and maintenance. This calculator puts both options on the same timeline and compares the true cost of each — plus what you own at the end.

What it answers, and what it doesn't

It answers: for a given rent, price, down payment, rate, and horizon, which option leaves you better off in dollars, and — with the breakeven feature below — roughly what appreciation rate it would take to flip the answer. It counts the costs renters never see: property tax, maintenance, closing costs, and the interest portion of the mortgage.

It does not answer: what prices or rents will actually do (appreciation is fixed at 3%/yr; rent is held flat), what your life looks like in seven years, or the non-financial side — mobility, control, landlord risk. It uses fixed, non-editable assumptions for property tax, maintenance, insurance, closing costs, selling costs, and the renter's investment return — not your actual numbers. Treat the verdict as arithmetic on those built-in assumptions, not a prediction.

Every input, explained

This calculator only asks for five numbers. Everything else — appreciation, the renter's investment return, property tax, maintenance, insurance, closing costs, and selling costs — is a fixed modeling assumption you cannot change on the page (see below for the exact figures). That is a deliberate simplification, not an oversight, but it means the verdict is only as good as those built-in assumptions.

Home price. The price of the home you would buy. It sets the mortgage size, the closing costs, and — via the fixed appreciation rate — the home's value when you sell.

Monthly rent. Rent for a comparable place today. The calculator holds this flat for the entire horizon — it does not model rent increases. That is intentional and disclosed in the calculator's own assumptions, but it means a long horizon quietly favours buying more than a real rental market might, since real rents rarely stay flat for seven or ten years.

Down payment. Entered as a percent of price (or a dollar amount, using the toggle). Canada's legal minimum rises with price — 5% up to $500,000, 10% on the slice above that, 20% at $1.5M or more — and the calculator raises your entry to that floor if you type less.

Mortgage rate. The contract rate for the buyer's mortgage. Amortization is not a field you set — it is fixed at 25 years inside the calculator.

Time horizon (years). How long before you would sell. This is usually the input that decides the comparison: fixed costs like closing (2% of price) and selling commission (5% of the future sale price) get spread over more years the longer you stay, which tends to favour buying at longer horizons.

What the calculator assumes instead of asking you. Home price growth is fixed at 3%/yr. The renter is assumed to invest whatever they don't spend at 5%/yr. The buyer pays 1%/yr property tax, 1%/yr maintenance, and $100/month insurance; the renter pays $30/month renter's insurance. Buying closing costs are fixed at 2% of the price (not a 1.5%–4% range), and selling costs are fixed at 5% of the future sale price. There is no separate condo-fee line — if you're comparing a condo, its fees aren't modeled unless you fold them into your own read of the property-tax-and-maintenance assumption above.

How the math works

The buyer's side: a monthly cost of mortgage payment (using Canada's semi-annually compounded formula) plus 2% of the price per year for tax and maintenance plus $100/month insurance. Total cash out over the horizon is the down payment, plus 2% closing costs, plus every one of those monthly payments. At the end, the home is assumed to have grown at 3%/yr; selling costs (5% of that future value) and the remaining mortgage balance come off, leaving buyer's equity. Buyer net position is that equity minus all the cash paid in.

The renter's side: rent plus $30/month insurance. Whatever the renter does not spend each month compared to the buyer (the "surplus") is assumed invested at 5%/yr, as is the down payment itself as a lump sum from day one. Renter net position is the future value of those investments minus all the rent paid over the horizon. Note that neither the down-payment lump sum nor the monthly surplus depends on how fast home prices grow — only the buyer's side does.

The headline is simply buyer net position minus renter net position: positive means buying comes out ahead in dollars over that horizon, negative means renting does.

Worked example: $2,400/month rent vs a $620,000 home, 7-year horizon

Inputs: $620,000 price, $2,400/month rent, 20% down, 5% mortgage rate, 7-year horizon.

• Down payment: 20% × $620,000 = $124,000; mortgage $496,000.
• Mortgage payment, 25-year amortization, semi-annual compounding: $2,884.76/month.
• First month's interest: $496,000 × 0.41239% ≈ $2,045; principal that first month ≈ $839.30 — most of the early payment is interest, not equity.
• Buyer's monthly cost — mortgage payment + 2%/yr tax and maintenance ($1,033.33/mo) + $100/mo insurance: $4,018.09/month. (No condo-fee line exists in this calculator; this is tax, maintenance, and insurance only.)
• Renter's monthly cost: $2,400 rent + $30 insurance = $2,430/month — $1,588.09 less than the buyer, every month.
• Buying closing costs, fixed at 2%: $12,400.

Over 84 months, the buyer's total cash out is the down payment plus closing plus every monthly payment: $124,000 + $12,400 + (84 × $4,018.09) ≈ $473,920. At 3%/yr, the home is worth about $762,522 after 7 years; 5% selling costs take about $38,126, and the remaining mortgage balance is about $411,952 — leaving buyer's equity of about $312,444. Buyer net position: about −$161,476 (equity minus all the cash paid in).

On the renter's side, the $124,000 down payment invested at 5%/yr for 7 years grows to about $174,480; the $1,588.09/month surplus, invested monthly at the same rate, grows to about $158,688. Total investments: about $333,168. Rent paid over 84 months: $2,430 × 84 = $204,120. Renter net position: about $129,048.

Buyer net (−$161,476) minus renter net ($129,048) is about −$290,524 — renting comes out ahead by roughly $290,524 under these assumptions. This example illustrates how much the fixed 3%/yr appreciation and 5%/yr investment-return assumptions drive the answer, not just the monthly cash gap: the buyer's monthly cost really is materially higher here, and that gap compounds against them on the renter's side of the ledger. Using the calculator's own breakeven-appreciation output (see below), home prices would need to grow at about 8.1%/yr instead of 3%/yr — everything else held the same — for buying to catch up.

Provincial quirks and edge cases

This calculator does not adjust for province. Closing costs are a flat 2% of price everywhere in this model, even though real land transfer tax varies enormously by province and city (Toronto's can run well over 2% before rebates; Alberta's registration fees are a few hundred dollars). If you want a province-specific closing-cost number, use the site's Land Transfer Tax or Closing Costs calculator and compare that to the flat 2% used here.

The principal residence exemption is invisible in this math. Sell the home you live in and the gain is capital-gains exempt — a real subsidy to buying that this dollars-only comparison never models, because it only tracks cash and equity, not tax.

Rent control changes the real rent path. This calculator holds rent completely flat for the whole horizon — it does not even model free-market rent inflation, let alone rent-control guideline increases. If your unit is rent-controlled, the flat-rent assumption understates what a free-market renter would pay, but overstates what you personally might pay if your rent is capped below market.

Questions to ask a professional

1. (Broker) What is the interest/principal split on my actual mortgage quote in years one, three, and five — how much am I really building in equity versus paying in interest?
2. (Realtor) What would selling costs realistically be on a home like this — is 5% commission negotiable, and what do comparable sellers in my market actually pay?
3. (Tax pro) If I ever convert this home to a rental, how does the change of use get taxed, and what records should I keep from day one?
4. (Financial planner) Is 5%/yr a reasonable long-run return for how I would actually invest the money if I kept renting — what would a more conservative or more aggressive assumption do to this comparison?