Rent vs Buy Calculator
This doesn't just stack rent against a mortgage payment — it compares buying against renting and investing the difference, which is the fairer way to weigh them. It uses the Canadian mortgage math (semi-annual compounding, CMHC, provincial land transfer tax), counts the property tax, maintenance and selling costs owning really carries, gives the home its tax-free gains and the renter's portfolio its returns — then tells you the year buying breaks even. 2026 rules, educational only.
Net worth over time — buy vs. rent & invest
Where the money goes
Renting isn't "throwing money away" and buying isn't "free money" — both spend real cash every year. The difference is what you're left holding: home equity for the buyer, a portfolio for the renter.
How sensitive is this?
The honest answer to "rent or buy?" is "it depends" — mostly on two things nobody can know: how fast homes grow and what investing earns. Each cell is the break-even year at that pair (your current pick is highlighted). "Rent" means renting wins for your whole horizon; lower numbers mean buying pays off sooner.
Read it as: the further down (lower home growth) and right (higher investment return) you go, the longer buying takes to win — because renting-and-investing gets more attractive. Everything else stays at your current inputs.
How this is calculated (the method, and the Canadian details)
- The fair comparison. Two people start with the same cash — everything the buyer pays up front (down payment + land transfer tax + legal/closing) — and the same monthly housing budget. The buyer sinks the cash into the home; the renter invests it. Each month, whoever's housing costs less invests the surplus at your investment return. That's the apples-to-apples way to compare: "rent and invest the difference" versus "buy." (It assumes the renter actually invests the difference every month — in real life many don't, which is a big reason buying wins in practice.)
- Net worth, not monthly payment. At any point, the buyer's net worth is the home's value minus selling costs minus the mortgage still owing (their equity), plus any side investments. The renter's is simply their portfolio. We compare those.
- The break-even year is the first year the buyer's net worth catches the renter's, assuming you sell then. Before it, renting-and-investing is ahead; after it, owning pulls away (in most growth scenarios).
- Canadian mortgage math. The payment uses semi-annual compounding (the Canadian fixed-rate convention), and CMHC insurance is auto-added and financed when you put down less than 20%. The rate is held constant over the horizon — real renewals could move it.
- Land transfer tax is calculated from the 2026 provincial brackets (including Toronto's municipal tax and first-time-buyer rebates for Ontario, Toronto, BC and PEI) and added to the up-front cash the renter gets to invest instead. The provincial sales tax on the CMHC premium (ON, QC, SK, MB) is also paid up front in those provinces — this tool doesn't add it, so cash-to-buy-in is slightly understated there.
- Ongoing ownership costs. Property tax and maintenance are charged as a percentage of the home's current (appreciating) value each year; home insurance and condo fees grow at your rent-growth rate as a general inflation proxy. Rent grows at the rate you set. For a condo, the strata fee already covers the building, so drop the maintenance figure (≈0.5%, interior only) to avoid double-counting.
- Fees, tax, and the principal-residence exemption. Your home's gains are never taxed — that's the Canadian rule. The renter's portfolio carries an annual drag in percentage points that bundles fund fees (MER) and ongoing tax: ≈0.2 for a low-cost ETF in a TFSA, ≈1–1.5 for a taxable account. We use a flat drag on purpose — taxing the whole return at a marginal rate every year would over-tax capital gains that don't get realised until you sell, while a tax-free lump at the end would flatter a taxable account. It's a deliberate simplification of a messy reality (eligible dividends, the 50% inclusion, deferral), not an exact tax calculation. That fees/tax asymmetry between a home and a portfolio is real and often the whole story.
- Risk isn't modelled — and it's not symmetric. At 20% down you're ~5× leveraged on a single, illiquid asset, so the home's return is amplified both ways; the renter's portfolio is unlevered and diversified. This tool draws one straight-line path at your chosen returns — it can't show volatility, a housing downturn wiping out leveraged equity, or the probability of either outcome. The "How sensitive is this?" grid varies the two big assumptions, but it's still central estimates, not a risk model.
- Price-to-rent. Shown up top as a quick sanity check — home price ÷ annual rent. Historically, under ~15 leans toward buying and over ~21 toward renting. It's the fastest way to tell whether your rent and price inputs are realistic for each other.
- Returns compound monthly from the annual rates you enter (the portfolio's net of the fee/tax drag):
(1 + annual)1/12 − 1. Home price, rent and the portfolios all use this convention so the paths are consistent. - Today's dollars. The headline figures and the chart are in future (nominal) dollars; the verdict also shows the gap in today's purchasing power using the inflation rate you set. Inflation doesn't change who wins or the break-even year — it only rescales the dollars.
- What it deliberately ignores. Moving costs, the variability of returns (this is a straight-line average, not a Monte Carlo — so it can't show how leverage amplifies a housing downturn), mortgage renewal-rate risk, and every non-financial reason people rent or buy. Note too that home-price growth and rent growth tend to move together over the long run, so setting them far apart isn't realistic. A real decision is more than the spreadsheet.
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