Rent or buy: who wins the money race?
Compare buying a home with renting and investing the difference, on net wealth rather than monthly payments. Real Canadian mortgage math, closing and selling costs, rent increases, and the year buying catches up, if it ever does. Every assumption is visible and editable.
Over 10 years, under these assumptions
Renting comes out ahead
Renting and investing the difference leaves you about $68,391 richer after 10 years. Buying never catches up within 30 years under these assumptions.
Renting wins in 6 of 9 scenarios below; the answer depends on your assumptions.
Net wealth, buy vs rent
- Buy: home value minus selling costs and mortgage
- Rent: invested savings
Years along the bottom. The lines never cross within 30 years.
| After | Buy | Rent and invest |
|---|---|---|
| 5 years | $234,457 | $303,512 |
| 10 years | $491,953 | $560,344 |
Buying: what you would walk away with if you sold (home value minus 4.5% commission, legal and moving, minus the mortgage left). Renting: the down payment, closing costs and moving money invested instead, plus each month's difference between owning costs and rent.
What if the assumptions are wrong?
| Home price growth | Return 3% | Return 5% | Return 7% |
|---|---|---|---|
| 1% a year | Rent | Rent | Rent |
| 3% a year | Rent | Rent | Rent |
| 5% a year | Buy (yr 4) | Buy (yr 5) | Buy (yr 6) |
The pattern is the honest headline: the answer turns on two numbers nobody knows in advance.
Month one: owning vs renting
| Rent, first month | $2,600 |
|---|---|
| Owning, first month | $5,269 |
| Mortgage payment at 4.09% | $3,941 |
| Property tax | $512 |
| Home insurance | $150 |
| Maintenance (1% of value a year) | $667 |
| Payment at the stress-test rate (to qualify) | $4,789 |
With 10% down, a CMHC premium of $22,320 (3.1%) is added to the mortgage. Leaving it out would flatter buying.
Lenders qualify you at the higher payment, even though you would pay the lower one.
Price-to-rent ratio
25.6: the price is 25.6 times a year's rent, which is rent-favoured (under 15 leans buy, 15 to 20 is a toss-up, over 20 leans rent).
A rule of thumb to cross-check the full calculation above, never a replacement for it.
The cost of moving sooner
Buying and then selling costs about $58,000 in transaction costs (7.2% of the price): closing costs going in, plus commission, legal and moving on the way out. That is why short stays favour renting: the home has to grow enough to pay those costs back.
Notes on these numbers
- Monthly stretch: owning costs $5,269 in month one, more than 1.4 times your rent. Even when buying wins over time, the first years can be house-rich and cash-poor.
- Fixed rate throughout: the mortgage rate is held for the whole period. Real mortgages renew every few years at whatever rates are then.
An illustration under the assumptions shown, not a forecast or advice. Home prices, rents, rates and returns will not follow a straight line.
How the math works
- It compares net wealth, not monthly payments. The buyer's wealth is what they would walk away with if they sold: home value, minus selling commission, legal and moving, minus the mortgage left.
- The renter invests what the buyer spends. The down payment, closing costs and moving money go into investments on day one, and each month the renter invests the difference between the owner's costs and the rent. If owning is cheaper than renting in a month, the renter draws down instead.
- Month by month: rent grows at your rate; property tax and maintenance grow with the home's value; insurance and condo fees grow at the same rate as rent. The mortgage uses Canadian semi-annual compounding and stops once it is paid off.
- Breakeven is the first year the buyer is ahead. If that is after the years you plan to stay, or never within 30 years, the verdict is to rent.
- The 3 by 3 grid reruns everything at home price growth of 1%, 3% and 5% and investment returns of 3%, 5% and 7%. If most cells agree, the answer is sturdier than any single guess.
- Not modelled: rate changes at renewal, special assessments, FHSA and Home Buyers' Plan tax effects (the down payment is assumed to be saved already), capital gains (a principal residence is tax-free; investments in a TFSA are too), and the value of stability or flexibility.
Sources and dates
- Rent-vs-buy calculator default assumptions: internal design default, checked 2026-09-27assumption
- Ontario rent increase guideline 2026: www.ontario.ca, checked 2026-09-27
- BC rent increase limit 2026: www2.gov.bc.ca, checked 2026-09-27
- Toronto residential property tax rate (2026): www.toronto.ca, checked 2026-09-27
- Calgary residential property tax rate (2026): www.calgary.ca, checked 2026-09-27
- Edmonton residential property tax rate (2026): www.edmonton.ca, checked 2026-09-27
- Home insurance per month (planner default): internal design default, checked 2026-09-30assumption
- Mortgage rate snapshot (September 2026, Ratehub): www.ratehub.ca, checked 2026-09-27
- Canadian semi-annual compounding conversion: www.osfi-bsif.gc.ca, checked 2026-09-27
- OSFI minimum qualifying rate (stress test): www.osfi-bsif.gc.ca, checked 2026-09-27
- CMHC mortgage insurance premiums (% of mortgage): www.cmhc-schl.gc.ca, checked 2026-09-27
- Minimum down payment tiers (federal, Dec 15, 2024): www.canada.ca, checked 2026-09-27
- Closing costs rule of thumb: www.cmhc-schl.gc.ca, checked 2026-09-27