Rent vs Buy Calculator: how it works in 2026, with a worked example

Questions people ask

Is it better to rent or buy in Canada right now?

It depends on the price-to-rent ratio where you live, how long you stay, and what the renter does with the savings. In expensive cities where a home costs 25 to 30 times the annual rent, renting and investing often wins over 5 to 10 years; in cities where the ratio is under 20, buying usually wins. Enter your own numbers.

What costs of owning do people forget?

Property tax (0.5% to 1.2% of value a year), maintenance (about 1% of value a year on average, lumpy), insurance, condo fees, the CMHC premium, land transfer tax at purchase and 4% to 6% of the price in commissions and legal fees at sale. The mortgage payment is usually only two-thirds of the true cost of owning.

Why does the renter need to invest to come out ahead?

The renter's advantage is the down payment, closing costs and any monthly saving that the buyer sinks into the house. If that money is spent rather than invested, renting loses almost every comparison. The calculator assumes it is invested at the return you enter.

Why does buying lose over short periods?

Transaction costs. Land transfer tax and CMHC at purchase plus 5% to sell can equal several years of the difference between owning and renting. Under about five years, buying rarely wins unless prices jump.

Are the gains taxed?

A principal residence is exempt from capital gains tax, which the calculator reflects. The renter's investment gains are treated as tax-free, as if held in a TFSA; in a taxable account the renter's result would be lower, which favours buying slightly.

What growth rates should I assume?

Over long periods Canadian house prices have grown a little faster than inflation, but the last 25 years were unusual. Try 2% to 3% for home prices, 5% to 6% for a balanced portfolio, and 2% to 3% for rent, then test what happens if prices are flat for a decade.

What is the 5% rule for rent vs buy?

A rule of thumb that owning costs about 5% of the home's value a year in unrecoverable costs (property tax, maintenance and the cost of the capital tied up), so if annual rent is less than 5% of the price, renting is cheaper. The calculator's break-even rent is the precise version of that number for your inputs.

How long do I need to stay for buying to pay off?

Usually 5 to 8 years in most Canadian cities, because land transfer tax, legal fees and the 4% to 5% commission when you sell are large fixed costs. The result shows the first year the owner is ahead; if you might move before then, renting and investing typically wins.

Does the calculator include what the renter earns on the down payment?

Yes. The renter invests the down payment, the closing costs and, every year, whatever owning would have cost more than renting, at the return you enter. That opportunity cost is what most bank calculators leave out and it is often the deciding factor.

How much can my rent go up each year?

In Ontario the 2026 guideline for rent-controlled units is 2.1%, and in British Columbia 2.3%; units first occupied after November 2018 in Ontario are exempt. Other provinces have no cap and market increases apply. The calculator uses the guideline by default and lets you override it.