Rent vs buy calculator

It depends on the price, the rent, how long you stay and what your money would earn otherwise. Buying tends to come out ahead over longer periods as the mortgage is paid down, while renting can win over a few years because buying and selling costs are high. This calculator compares the two on net worth, using your numbers.

It tracks two households. The buyer pays the down payment, closing costs and the monthly costs of owning; the renter invests the down payment and closing costs instead, plus the monthly difference whenever renting is cheaper. After each year we compare the buyer’s home equity, less selling costs, with the renter’s portfolio.

It’s the first year in which buying leaves you with more net worth than renting. With a $750,000 home, 20% down at 4.5% over 25 years, $3,000 rent rising 3% a year and the other default assumptions here, renting is ahead by about $1,889 after 10 years and buying pulls ahead in year 11.

Budget for property tax, home insurance, maintenance and repairs, utilities and condo fees if you have them. On a $750,000 home with 20% down at 4.5%, the mortgage payment is about $3,321 a month, and adding 0.8% property tax, 1% maintenance and $2,000 a year of insurance brings the first month to about $4,613.

Common ones are land transfer tax, legal fees, a home inspection, title insurance and adjustments for prepaid property tax or utilities. In Ontario, Quebec and Saskatchewan, provincial sales tax on the CMHC premium is also due at closing and can’t be added to the mortgage. Use our land transfer tax calculator for the biggest item.

Not entirely. Homeowners also pay costs they don’t get back, such as mortgage interest, property tax, maintenance, insurance and the costs of buying and selling. The fair comparison is rent against those unrecoverable costs, with the renter investing what they don’t spend.

With less than 20% down, mortgage default insurance is required and the premium, from 2.80% to 4.00% of the loan, is usually added to the mortgage. That raises your payment and interest, which makes buying slower to break even. A 30-year amortization with under 20% down adds 0.20 points to the premium.

Use a return that matches how the renter would actually invest, after fees. A GIC or savings account rate suits cautious savers; a diversified portfolio might earn more over long periods but isn’t guaranteed. Try a few returns to see how sensitive the answer is.

Usually not on a home that was your principal residence for every year you owned it, under the CRA’s principal residence exemption, though you must report the sale on your tax return. Investment gains outside a TFSA or FHSA are taxable, which this calculator doesn’t deduct, so renting can look slightly better here than it would be.