Rent or Buy in Canada

Rent or Buy in Canada (2026): The Break-Even Math

In Canada, buying comes out ahead of renting only when two things are true together: the owner's yearly unrecoverable costs sit close to a year of rent, and the owner stays long enough to earn back the one-time costs of getting in and out. In the $600,000 illustration below, year-one unrecoverable costs are $49,976 against $30,000 of rent, and the renter is still ahead after 20 years.

By Finance Editorial Desk | October 22, 2026

Educational only. Every household, price, rent, and rate on this page is a labelled illustration chosen to show the method, not a forecast or a market quote. Tax and program rules are taken from the federal, provincial, OSFI, and CMHC pages listed under Sources and were checked in October 2026.

1. The question is not rent versus a mortgage payment

The comparison most people make first is monthly rent against the monthly mortgage payment. It is the wrong comparison for two reasons. Part of the mortgage payment is principal, which is savings you keep as equity. And the mortgage payment leaves out costs that only an owner pays: property tax, maintenance, home insurance, and the return the down payment would have earned somewhere else.

The cleaner test splits every dollar into one of two buckets.

Recoverable money comes back to you, at least in principle. For an owner, that is the principal portion of each payment and any rise in the home's value. For a renter, it is whatever they invest instead of putting it into a house.

Unrecoverable money is spent and gone. For a renter, that is the rent, plus tenant insurance. For an owner, it is four items:

Home insurance belongs on that list too, and the site's calculator includes it. Condo fees, if any, also belong there.

The decision rule that falls out of this is short. If the owner's unrecoverable costs are well above a year's rent for a comparable home, renting and investing the difference tends to win unless the home appreciates fast. If they are close to or below the rent, buying tends to win once the owner has stayed past the one-time costs. Everything else on this page is that rule made concrete.

2. The illustration: inputs and where they come from

The worked example uses the method in the site's Rent vs Buy Calculator. Six inputs are yours to set in the tool, and the rest are fixed assumptions built into it. Separating the two matters, because the fixed assumptions drive most of the result.

Inputs you can enter in the calculator (illustration values):

• Purchase price: $600,000
• Comparable monthly rent: $2,500
• Mortgage rate: 4.5 percent
• Home price growth: 3 percent a year
• Investment return on the renter's portfolio: 6 percent a year
• Horizon: 5, 10, and 20 years

Assumptions fixed inside the calculator (these are modelling choices, not Canadian facts or averages):

The tool runs month by month. Each month it computes the owner's cash outflow (mortgage payment plus tax, maintenance, and insurance), compares it to that month's rent, and adds the difference to the renter's portfolio. The renter starts with the down payment plus the buying costs already invested, because that is the cash they did not spend on a house. At the end of the horizon, the owner's wealth is the home's value, minus the remaining mortgage, minus selling costs. The renter's wealth is the portfolio. Neither side is taxed in the tool, which section 8 comes back to.

3. Year one, line by line

On a $600,000 price with 20 percent down, the mortgage is $480,000. At 4.5 percent over 30 years with the tool's monthly compounding, the payment is $2,432.09 a month. For comparison, the same loan compounded semi-annually works out to about $2,420.23, so the difference is under $12 a month and does not change the conclusion.

In the first month the owner pays:

Over the full first year, the owner's payments split like this, with the tax, maintenance, and insurance lines rising slightly each month because the tool grows the home's value monthly:

The owner's unrecoverable cost is about 8.3 percent of the purchase price. A comparable rent would have to be about $4,164.68 a month ($49,976.12 / 12) before year one was a wash on this measure alone.

Appreciation narrows the gap. At 3 percent growth, compounded monthly in the tool, the home is worth $618,250 after one year, a paper gain of $18,250. Subtract that from the $49,976.12 and the owner's net cost of shelter is about $31,726, which is close to the $30,000 rent. But that gain is only on paper, the one-time costs have not been paid back yet, and the renter's $1,582 a month keeps compounding. That is why the full model, not the year-one screen, decides the outcome.

4. The full worked example at 5, 10, and 20 years

These figures come from running the calculator's own month-by-month method with the inputs in section 2. Owner wealth is what the owner would walk away with after selling and paying off the mortgage. Renter wealth is the value of the invested portfolio.

Rounding to the dollar means a row can be off by $1 when you add it up yourself.

Three readings matter.

After one year the owner is behind their own starting cash. The owner put $141,000 of cash into the purchase. One year later, after selling costs, their equity is $115,081. That $25,919 shortfall is mostly the buying and selling costs, and it is the reason a short stay almost always favours renting.

The gap widens rather than closes in this illustration. With carrying costs of 3.3 percent of value a year (tax, maintenance, insurance) on top of interest, the owner's monthly outflow stays well above the rent for the whole period, so the renter keeps adding to the portfolio every month. Rent grows 3.5 percent a year, but it starts $1,582 below the owner's outflow and the owner's tax, maintenance, and insurance grow with the home's value too.

There is no break-even year in this case. The calculator reports a break-even year as the first year after year one in which owner wealth exceeds renter wealth. With these inputs that never happens within 40 years. That is not a general verdict on buying in Canada. It is a verdict on this combination of price, rent, and cost assumptions, and the next section shows which changes reverse it.

5. Sensitivity: what flips the answer

Each row changes one or two inputs from the base case and leaves everything else the same. The gap is owner wealth minus renter wealth, so a positive number means buying is ahead. The break-even column is the first year after year one in which buying leads, searched up to 40 years. The calculator's chart covers at least 15 years, or the horizon plus 5 if that is longer, so a break-even year beyond that range will show as not reached in the tool.

What the table says, in plain terms:

Rent relative to price is the biggest lever. Moving the rent from $2,500 to $3,500 on the same $600,000 home turns a $109,251 deficit at 10 years into an $80,718 lead. Annual rent of $30,000 is 5 percent of the price; $42,000 is 7 percent. Before running anything else, divide a year of comparable rent by the price.

Carrying costs come second. The calculator's fixed 3.3 percent a year for tax, maintenance, and insurance is a heavy assumption. Dropping it to 2.2 percent brings break-even to year 11 with nothing else changed. If your municipality's tax rate and the property's condition point to lower costs, the finance tool will overstate the cost of owning; the opportunity-cost version of the calculator lets you set the down payment and rent growth yourself and uses lighter fixed carrying costs (1.2 percent tax, 1.0 percent maintenance, 0.4 percent insurance), although it leaves out buying costs and assumes 6 percent selling costs, so its results will not match the table exactly.

A lower mortgage rate helps less than people expect. Going from 4.5 percent to 3.5 percent saves real money, but in this case it is not enough to produce a break-even year, because interest is only one of the four unrecoverable lines.

The investment return cuts both ways. A higher return makes the renter's invested difference grow faster, which favours renting. A renter who would not actually invest the difference, or who would earn a low return, should run the tool at a low return, and at 4 percent buying pulls ahead in year 17.

Rent growth matters most over long horizons. At 5 percent a year the owner eventually catches up (year 23). At 2 percent, closer to the 2026 rent-control guidelines, the renter's lead grows.

6. One-time costs: getting in and getting out

The calculator lumps buying costs into one 3.5 percent figure and selling costs into one 5 percent figure. Itemizing them shows which ones you can actually check.

Land transfer tax (Ontario example). Ontario's provincial land transfer tax is charged in brackets: 0.5 percent on the first $55,000, 1.0 percent from $55,000 to $250,000, 1.5 percent from $250,000 to $400,000, 2.0 percent above $400,000, and 2.5 percent above $2,000,000 where the land contains one or two single-family residences (Ontario.ca, calculating land transfer tax, checked October 2026). On $600,000:

An eligible first-time buyer can get a refund of up to $4,000 (Ontario.ca, first-time homebuyer refunds, checked October 2026), which brings this example to $4,475. Toronto adds its own municipal land transfer tax, and other provinces use different systems. The Ontario land transfer tax guide covers refunds, eligibility, and the Toronto layer in detail, and the Ontario land transfer tax calculator runs the brackets for any price.

Legal, title, inspection, and adjustments. These vary by firm and property, so this page does not give a figure. In the calculator's 3.5 percent, $21,000 on this price, the land transfer tax uses $8,475 and leaves $12,525 for everything else. If your quotes come in lower, the tool overstates the buying cost; outside Toronto, a first-time buyer with modest legal costs may be well under 3.5 percent.

CMHC premium on an insured mortgage. Below 20 percent down, lenders typically require mortgage loan insurance, and the premium is a percentage of the loan set by the loan-to-value ratio. CMHC's published premiums are 0.60 percent up to 65 percent loan-to-value, 1.70 percent to 75 percent, 2.40 percent to 80 percent, 2.80 percent to 85 percent, 3.10 percent to 90 percent, and 4.00 percent from 90.01 to 95 percent (CMHC, mortgage loan insurance cost, checked October 2026). Two illustrations on $600,000:

• 10 percent down ($60,000): loan $540,000, loan-to-value 90 percent, premium 3.10 percent, so $16,740.
• Minimum down payment ($35,000, see section 7): loan $565,000, loan-to-value about 94.2 percent, premium 4.00 percent, so $22,600.

CMHC notes that premiums in Quebec, Ontario, and Saskatchewan are subject to provincial sales tax, and that the sales tax cannot be added to the loan. The CMHC insurance guide covers how the premium is charged and the special cases. For the rent-versus-buy decision, the premium is simply another cost of getting in early with a smaller down payment. In the sensitivity table's insured row, the $16,740 is treated as cash paid at closing alongside the buying costs, which is a modelling simplification.

Selling costs. Commission rates are negotiated, and no official figure applies, so the tool's 5 percent is an assumption. On the 10-year sale price in the worked example it is $40,481. That one line is larger than the land transfer tax, and it is paid on the future price, not today's.

A round trip in this illustration is about $21,000 in, plus about $35,000 to $55,000 out depending on when you sell. At a short horizon, appreciation has to cover all of that before the owner breaks even.

7. Can you buy at all? The stress test and the down payment

A rent-versus-buy comparison assumes buying is available. Two federal rules decide whether it is.

Minimum down payment. The minimum is 5 percent of a purchase price of $500,000 or less. From $500,000 to $1.5 million, it is 5 percent of the first $500,000 plus 10 percent of the portion above $500,000. At $1.5 million or more it is 20 percent (Financial Consumer Agency of Canada, down payment, checked October 2026). On $600,000 that is $25,000 plus $10,000, or $35,000. The insured-mortgage price cap rose from $1 million to $1.5 million on December 15, 2024, and 30-year amortizations became available on insured mortgages for all first-time buyers and all buyers of new builds (Department of Finance Canada, December 2024, checked October 2026). A repeat buyer of a resale home with less than 20 percent down does not get the 30-year option, which raises the payment.

The stress test. Federally regulated lenders must qualify you at the greater of your contract rate plus 2 percentage points, or 5.25 percent (OSFI, minimum qualifying rate for uninsured mortgages, checked October 2026). The FCAC states that the same test applies to insured and uninsured mortgages, and that housing costs should stay within 39 percent of gross household income (GDS) and total debt within 44 percent (TDS) (FCAC, preparing to get a mortgage, checked October 2026). CMHC's underwriting counts principal, interest, property tax, heating, and 50 percent of condo fees in GDS (CMHC, calculating GDS and TDS, checked October 2026).

Illustration with the worked example's loan: a 4.5 percent contract rate qualifies at 6.5 percent, because 4.5 plus 2 is above 5.25. A $480,000 loan over 30 years at 6.5 percent, using the same monthly compounding as the calculator, is $3,033.93 a month. Add $600 of property tax and an assumed $100 for heating and housing costs are $3,733.93 a month, or $44,807 a year. At a 39 percent GDS limit, that needs gross household income of about $114,890, before any other debts are counted against TDS. A lender's own figure will differ with its compounding, heating estimate, and policy.

The practical point: if the stress test rules out the home you would want to buy, the rent-versus-buy question for that home is moot, and the real choice is between renting now and saving, or buying something cheaper. The mortgage stress test guide works through qualifying in more detail, the Canadian mortgage guide prices the j2 payment, the balance left at the first renewal and the 30-year insured option, and the Canadian mortgage affordability calculator estimates a price range from income.

8. Where the renter's invested difference lives: TFSA, FHSA, and tax

The calculator does not tax the renter's portfolio. That is only realistic if the money sits in a tax-sheltered account, so it is worth checking how much room exists.

TFSA. The TFSA dollar limit is $7,000 for 2026, the same as 2025 (CRA, registered plan limits, checked October 2026). Unused room carries forward, so your actual room depends on your history; your CRA account shows it.

FHSA. An FHSA gives $8,000 of participation room in the year you open it, up to a lifetime limit of $40,000 (CRA, contributing to your FHSA and FHSA definitions, checked October 2026). Contributions are generally deductible, and a qualifying withdrawal to buy a first home does not have to be included in income (CRA, withdrawals and transfers, checked October 2026). The account has a deadline: the maximum participation period ends on December 31 of the year of the earliest of the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal (CRA, closing your FHSA, checked October 2026). If you never buy, a direct transfer to your RRSP does not use up RRSP deduction room, as long as you have no excess FHSA amount.

That last rule is what makes the FHSA useful to a renter who is not sure: the money is sheltered if you buy, and it moves to retirement savings without using RRSP room if you do not. The FHSA guide covers the room rules and the qualifying-withdrawal conditions, and the FHSA growth modeler projects the account.

Does the room cover the example? In year one, the renter in the worked example invests $1,582.09 a month, or $18,985 for the year, on top of the $141,000 starting amount. New room for one person in 2026 is $7,000 in a TFSA plus $8,000 in an FHSA, or $15,000. About $3,985 of that year's difference, and much of the $141,000, would need carried-forward TFSA room, a spouse's room, an RRSP, or a taxable account. Money in a taxable account pays tax on interest, dividends, and realized gains, so the real renter outcome is somewhat lower than the tool shows unless the room exists. A couple has two sets of room, which changes this a lot.

The owner's side. A gain on a home that was your principal residence for every year you owned it is not taxed, but you must report the sale and the designation on Schedule 3 and Form T2091(IND) to claim the exemption (CRA, principal residence, checked October 2026). So the comparison is fair only when both sides are sheltered: the owner by the exemption, the renter by registered accounts. If the renter's money would be taxed, run the tool at a lower return to approximate the drag. The TFSA guide and the RRSP vs TFSA guide help decide which account takes the money first.

9. Edge cases where the simple answer breaks

A short horizon. At one year in the worked example, the owner's equity after selling is $25,919 below the cash they put in. A household that expects to move within a few years, for a job, a relationship, or a growing family, is paying buying and selling costs on a short stay. Unless prices rise fast, renting usually wins at that horizon. The calculator's "Nomadic Investor" setting sets a 3-year horizon and a 10 percent return to show this case, and those are illustrative settings, not predictions.

Condo fees and special assessments. The finance calculator has no condo-fee input. A $500 monthly fee on a $600,000 condo is $6,000 a year, or 1 percent of the price, so add it by hand: it pushes the owner's carrying costs from the tool's 3.3 percent of value to about 4.3 percent; entered as extra maintenance in the same model, it widens the renter's 10-year lead in the base case from $109,251 to $203,730. Condos add a second risk: if the corporation's reserve fund falls short for a major repair, owners can face a special assessment, a one-time bill on top of fees. Before buying, read the condo corporation's disclosure documents, its financial statements, and its most recent reserve fund study. A renter in the same building does not carry that risk.

Rent control changes the renter's line. In Ontario, the 2026 rent increase guideline is 2.1 percent and the 2027 guideline is 1.9 percent; the guideline is capped at 2.5 percent, and units first occupied for residential purposes after November 15, 2018 are exempt from it (Ontario.ca, residential rent increases, checked October 2026). In British Columbia, the 2026 limit is 2.3 percent and the 2027 limit is 2.2 percent, with at least three full months' notice and one increase per 12 months (Government of BC, rent increases, checked October 2026). A sitting tenant in a covered unit may face rent growth well below the calculator's 3.5 percent, which favours renting (see the 2 percent row in section 5). A tenant in an exempt newer Ontario unit, or in a province without a cap, has no such protection, and the 5 percent row is the more cautious test. Forced sale or renewal at a higher rate. The calculator holds one rate for the full horizon. Most Canadian mortgages have a term shorter than the amortization, so the loan is renewed at whatever rate applies at the end of each term. If rates are higher at renewal, the owner's interest line rises; the mortgage renewal guide shows the payment arithmetic.

Home as forced savings. The model assumes the renter invests every dollar of the difference. Many people do not. If the realistic alternative is that the $1,582 a month gets spent, the owner's principal repayment is savings the renter would not have made, and the comparison tilts toward buying. Be honest about which household you are.

10. Common mistakes in rent-versus-buy math

1. Comparing rent with the mortgage payment only. It ignores property tax, maintenance, insurance, and the down payment's opportunity cost, and it counts principal as a cost when it is savings.
2. Ignoring selling costs. On the 10-year sale in the example, selling costs are $40,481, more than the land transfer tax. An analysis that stops at buying costs flatters ownership.
3. Using the price you hope to pay with the rent of a different home. The rent must be for a comparable home in the same area, same size, same type. A one-bedroom rent against a detached-house price proves nothing.
4. Assuming the renter invests the difference without checking where. If the TFSA and FHSA room is not there, taxes reduce the renter's return; run the tool at a lower return.
5. Assuming appreciation. The sensitivity table shows the result swinging from a $168,107 renter lead at 2 percent growth to a $29,159 owner lead at 5 percent over 10 years. Nobody knows which one you will get. Test both.
6. Forgetting the insured-mortgage costs. Buying at 10 percent down adds a $16,740 premium in the example and removes 30-year amortization for repeat buyers of resale homes.
7. Treating a calculator default as a fact. The tool's 1.2 percent property tax and 1.5 percent maintenance are assumptions. Replace them with your municipality's rate and a realistic estimate for the specific home.
8. Skipping the stress test. A comparison that shows buying winning is useless if you cannot qualify at the contract rate plus 2 points.

11. A decision checklist

Work through these in order, with real numbers for the specific home and rental you are comparing:

1. Can you qualify? Check the minimum down payment and the stress-test payment against 39 percent of gross income. If not, compare renting with buying something cheaper.
2. What is the rent-to-price ratio? A year of comparable rent divided by the price. In the illustration, 5 percent did not break even and 7 percent did by year 5.
3. What are the owner's unrecoverable costs as a percent of price? Interest plus tax plus maintenance plus insurance plus opportunity cost. Compare the dollar total with a year of rent.
4. How long will you stay? Under about five years, the one-time costs are hard to recover. Check the break-even year in the calculator for your inputs.
5. Where will the renter's money go? Count your TFSA, FHSA, and RRSP room before assuming a tax-free return.
6. What does the stress case look like? Run 2 percent appreciation and a higher renewal rate. If buying only wins in the optimistic case, that is a bet, not a plan.

Run your own figures on the Rent vs Buy Calculator; the same engine is also available at the affordability route. For more owner-side tools, the homeowners hub groups the mortgage, tax, and closing-cost calculators.

Sources

• Ontario Ministry of Finance, Calculating land transfer tax: https://www.ontario.ca/document/land-transfer-tax/calculating-land-transfer-tax (checked October 21, 2026)
• Ontario, Land transfer tax refunds for first-time homebuyers: https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers (checked October 21, 2026)
• CMHC, Mortgage loan insurance cost: https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers/cmhc-mortgage-loan-insurance-cost (checked October 22, 2026)
• CMHC, Calculating GDS and TDS: https://www.cmhc-schl.gc.ca/professionals/project-funding-and-mortgage-financing/mortgage-loan-insurance/calculating-gds-tds (checked October 22, 2026)
• OSFI, Minimum qualifying rate for uninsured mortgages: https://www.osfi-bsif.gc.ca/en/supervision/financial-institutions/banks/minimum-qualifying-rate-uninsured-mortgages (checked October 21, 2026)
• Financial Consumer Agency of Canada, Preparing to get a mortgage: https://www.canada.ca/en/financial-consumer-agency/services/mortgages/preparing-mortgage.html (checked October 22, 2026)
• Financial Consumer Agency of Canada, Down payment: https://www.canada.ca/en/financial-consumer-agency/services/mortgages/down-payment.html (checked October 21, 2026)
• Department of Finance Canada, December 15, 2024 mortgage reforms in force: https://www.canada.ca/en/department-finance/news/2024/12/boldest-mortgage-reforms-in-decades-come-into-force-today.html (checked October 21, 2026)
• CRA, MP, DB, RRSP, DPSP, ALDA, TFSA limits: https://www.canada.ca/en/revenue-agency/services/tax/registered-plans-administrators/pspa/mp-rrsp-dpsp-tfsa-limits-ympe.html (checked October 21, 2026)
• CRA, Contributing to your FHSA: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html (checked October 21, 2026)
• CRA, Definitions for FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/definitions.html (checked October 21, 2026)
• CRA, Withdrawals and transfers out of your FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html (checked October 22, 2026)
• CRA, Closing your FHSA: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/closing-your-fhsa.html (checked October 21, 2026)
• CRA, Principal residence and other real estate: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html (checked October 21, 2026)
• Ontario, Residential rent increases: https://www.ontario.ca/page/residential-rent-increases (checked October 21, 2026)
• Government of British Columbia, Rent increases: https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/rent-rtb/rent-increases (checked October 21, 2026)