Quick answer
On our Canadian defaults ($700,000 home, $2,300 rent, 4.4% rate, 20% down), renting and investing the difference finishes ahead after 10 years, and buying only wins if comparable rent is above roughly $2,800 a month. High prices relative to rents are the reason. Buying looks better in Prairie and Atlantic cities, with longer stays, or if rates fall at renewal.
Rent vs buy calculator Canada: how do you use it?
Enter the purchase price, a comparable rent, the mortgage rate you can actually get, and buying costs that include your province’s land transfer tax. On our Canadian defaults, renting and investing comes out ahead after 10 years, and buying only wins when comparable rent exceeds roughly $2,800 a month — a reflection of how high Canadian home prices are relative to rents.
This rent vs buy calculator for Canada runs a month-by-month simulation. The buyer pays the down payment and closing costs, then mortgage payments, property tax, maintenance and home insurance. The renter pays rent and tenant insurance, invests the money the buyer spent upfront, and invests any monthly saving. At the end of the horizon the buyer sells, pays realtor and legal fees, and we compare net worth. Our methodology covers the details.
Why our Canadian defaults are what they are
| Input | Default | Reasoning |
|---|---|---|
| Home price | $700,000 | Roughly the national average across all housing types |
| Monthly rent | $2,300 | A typical asking rent for a comparable unit |
| Mortgage rate | 4.4% | Close to competitive five-year fixed rates in late 2026 |
| Amortization / down payment | 25 years / 20% | The uninsured (conventional) standard |
| Property tax | 0.8% | A blended municipal rate; big cities are lower, smaller towns higher |
| Buying costs | 2.5% | Land transfer tax, legal fees, title insurance, inspection |
| Selling costs | 5% | Realtor commission plus HST and legal fees |
| Maintenance / insurance | 1% / 0.2% | Repairs and a homeowner policy |
| Price / rent growth | 3% / 3.5% | Long-run averages, with rents slightly ahead |
| Investment return | 6.5% | A balanced portfolio in a TFSA or RRSP |
A note on rates: the Bank of Canada raised its policy rate to 2.5% on October 28, 2026, its first increase in more than three years, and fixed rates had already been climbing with bond yields. Broker surveys in late October showed the lowest insured five-year fixed rates around 4.4–4.6%, while uninsured loans (20% down or more) were often priced higher, around 5%. If you are putting 20% down, try 4.9–5.2% to see how sensitive your result is.
Worked example: renting vs buying a $700,000 home
Upfront: $140,000 down payment plus $17,500 in closing costs = $157,500. The renter invests that on day one.
Monthly payment: a $560,000 loan at 4.4% over 25 years is $3,081 a month using monthly compounding (about $3,068 with Canada’s semi-annual compounding on fixed rates).
Owner costs in month one: property tax ($467), maintenance ($583) and insurance ($117) add about $1,167, for total housing costs near $4,250 against $2,325 for the renter. The renter can invest more than $1,900 a month.
After 10 years: renting and investing finishes roughly $95,000 ahead. Buying doesn’t break even within 10 years on these inputs. The break-even rent is about $2,800: if a comparable home rents for more than that, buying wins.
The 5% rule agrees: $700,000 Ă— 5% Ă· 12 = $2,917, which is above the $2,300 rent, so the quick test also favours renting.
How do CMHC insurance and the stress test change the maths?
Minimum down payment: 5% on the first $500,000, 10% on the portion between $500,000 and $1.5 million, and 20% at $1.5 million or more. On a $700,000 home that means at least $45,000.
Mortgage default insurance: below 20% down, you must insure the loan through CMHC or a private insurer. The premium is added to the mortgage. CMHC’s premium schedule is:
| Loan-to-value | Premium on the loan | Example on $700,000 |
|---|---|---|
| 80.01–85% | 2.80% | 15% down: about $16,660 |
| 85.01–90% | 3.10% | 10% down: about $19,530 |
| 90.01–95% | 4.00% | Minimum down (about 6.4%): about $26,200 |
Premiums attract provincial sales tax in Ontario, Quebec and Saskatchewan, which must be paid in cash at closing. Since December 15, 2024, insured mortgages have been available on homes up to $1.5 million, and first-time buyers and buyers of new builds can choose a 30-year amortization on an insured loan (with a small premium surcharge). With 10% down and a 30-year amortization on our default home, the payment would be roughly $3,260 instead of about $3,570 over 25 years — lower monthly cost, but more interest over time.
The stress test: you must qualify at the higher of 5.25% or your contract rate plus two percentage points. At a 4.4% rate, the lender tests you at 6.4%. That limits how much you can borrow, not what you pay. Federally regulated lenders no longer re-apply the test when an uninsured borrower switches lenders at renewal, which makes shopping around at renewal easier.
Why renewal risk matters in Canada
Unlike the 30-year fixed loans common in the United States, Canadian mortgage terms usually run one to five years. Your rate will reset several times during a 25-year amortization. On the default loan, after five years you’d still owe about $491,000. Renewing for 20 years at 5.5% would push the payment to about $3,380; at 3.5% it would fall to about $2,850.
The calculator uses one rate for the whole horizon, so enter the average rate you expect across all your renewals. Then test a rate one point higher. If the higher rate would stretch your budget, that is a reason for caution regardless of what the 10-year verdict says. See how interest rates affect rent vs buy for more.
What are buying and selling costs in Canada by province?
| Province / city | Land transfer tax on $700,000 | First-time buyer help |
|---|---|---|
| Ontario (outside Toronto) | About $10,475 | Refund up to $4,000 |
| Toronto | About $10,475 provincial + about $10,475 municipal | Up to $4,000 + up to $4,475 |
| British Columbia | About $12,000 property transfer tax | Exemption for qualifying first-time buyers below set price limits |
| Alberta | No land transfer tax; small title and mortgage registration fees | — |
| Quebec | “Welcome tax” on a sliding scale; Montreal uses higher top brackets | Some municipal programs |
Add legal fees ($1,500–$2,500), title insurance, an inspection and, in some cases, a property appraisal. When selling, realtor commissions are commonly in the 3–5% range plus HST, which is why our selling default is 5%.
Tax treatment: your principal residence is generally exempt from capital gains tax under the principal residence exemption, and mortgage interest on your home is not tax-deductible. The calculator doesn’t model taxes, which suits Canada well.
Savings accounts that help buyers: the FHSA allows $8,000 a year (up to $40,000) of deductible contributions and tax-free withdrawals for a first home, and the RRSP Home Buyers’ Plan lets each first-time buyer withdraw up to $60,000. A federal GST rebate for first-time buyers of new homes was also introduced in 2025. Include any of these in your down payment.
How do Toronto, Vancouver, Calgary, Montreal and Halifax compare?
- Toronto: our Toronto preset uses $1,050,000 and $2,700 rent. With a price-to-rent ratio above 30, renting usually wins unless you stay 15+ years. Condo fees for apartments can be $600 a month or more.
- Vancouver: the highest price-to-rent ratios in the country. Expect renting to win over most horizons, especially for condos with high strata fees.
- Calgary: no land transfer tax and prices far below Toronto’s, with strong rent growth. Buying often breaks even within 5–7 years.
- Montreal: lower prices and a large rental stock with rules that limit increases for sitting tenants. Long-term renters can do well; buyers should budget for the welcome tax.
- Halifax: rapid rent growth in recent years has made buying more competitive, but check municipal deed transfer tax and property tax.
For a broader look, see rent vs buy around the world.
When does renting win vs buying in Canada?
Renting tends to win when:
- The price-to-rent ratio is above about 25, as in Toronto and Vancouver.
- You expect to move within five to seven years.
- You’d need to buy with 5–10% down and pay a 3–4% CMHC premium.
- You’ll invest the monthly difference in a TFSA or RRSP consistently.
Buying tends to win when:
- You live in a lower-cost city where rent is close to the cost of owning.
- You plan to stay through at least two renewals.
- Rents are rising faster than 3.5% a year and vacancies are low.
- You value control over your home and can absorb a higher renewal rate.
Canadian rent vs buy checklist
- Use a rate quote for your actual down payment (insured vs uninsured).
- Calculate land transfer tax for your province and city, minus any rebate.
- Add CMHC premium and PST if you’re putting down less than 20%.
- Look up the property tax rate in your municipality.
- Add condo or strata fees as a monthly fee.
- Stress-test a renewal rate one point higher.
- Include FHSA and Home Buyers’ Plan savings in your down payment.
- Compare the break-even rent with real listings for the same type of home.
This calculator is for education, not financial advice; confirm figures with a mortgage broker or lawyer.
Frequently asked questions
Is it better to rent or buy in Canada in 2026?
In expensive markets such as Toronto and Vancouver, renting a comparable home is usually much cheaper than owning, and renting and investing tends to win over 10 years. In Calgary, Edmonton, Winnipeg and much of Atlantic Canada, prices are lower relative to rents and buying often breaks even within 5–8 years. Run your city's numbers to see which side you fall on.
Does the calculator account for Canadian semi-annual compounding?
The calculator uses standard monthly compounding. Canadian fixed-rate mortgages are compounded semi-annually by law, which makes the real payment slightly lower — about $3,068 instead of $3,081 on our default $560,000 loan at 4.4%. The difference is small enough not to change the verdict.
How do I include CMHC mortgage insurance?
If your down payment is under 20%, a mortgage default insurance premium is added to your loan. Increase the home price input by the premium so the loan is larger, or add it to buying costs. With 10% down on $700,000, CMHC's 3.10% premium on a $630,000 loan is about $19,530.
What happens at mortgage renewal?
Most Canadians take a five-year term within a 25- or 30-year amortization, so the rate resets several times. On our default loan you'd owe about $491,000 after five years. Renewing at 5.5% would raise the payment to about $3,380; renewing at 3.5% would cut it to about $2,850. Test both rates in the calculator.
Should I include land transfer tax in buying costs?
Yes. It is the biggest closing cost in most provinces. Ontario's tax on a $700,000 home is about $10,475, and buyers in Toronto pay a similar municipal tax on top. First-time buyer rebates reduce both. Alberta and Saskatchewan have no land transfer tax, only title registration fees.
Can my FHSA change the rent vs buy result?
The First Home Savings Account lets first-time buyers contribute up to $8,000 a year, to a $40,000 lifetime limit, with tax-deductible contributions and tax-free withdrawals for a qualifying home. That effectively boosts your down payment, so include FHSA savings in your down payment and remember the renter could have invested in a TFSA too.