Rent vs. Buy Calculator for Canadians 2024

This Page's Content Was Last Updated: July 4, 2022
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Your Home Purchase
Your Annual Costs
Buying is better if you stay for
3.17 years or longer.
Otherwise, renting is better.

Year Comparison

Total Costs If You Buy
Total Costs If You Rent
Renting costs $20,48620k more than buying at the end of year 5

Average Monthly Cost Buy vs Rent

Best 5-Year Fixed Mortgage Rates in Canada CanadaLeaf
Mortgage Term:

Renting vs. Buying

The most important factor that you should consider when choosing to rent or buy a house is how long you think you will be staying in a certain area. On balance, the longer you plan to stay, the more cost-efficient it will be to buy a house. This is because the home value generally appreciates over time and the costs involved in buying/selling the house (approximately 5% of the property’s selling price) are spread out/amortized over a longer period of time. The cost of selling a house a house consists of real estate agent commissions and legal fees while the closing costs for buyers consists of land transfer taxes and legal fees

Let’s say you buy a $500K home. Assuming a 2% growth rate, after 25 years your home will be worth $820,303. You will have to pay closing costs of 5%, or $41,015, but because your property value has appreciated, it more than covers your closing costs. If we assume you buy a house for 1 year with the same 2% growth rate, then your house will be worth $510,000. You will pay closing costs of 5%, or $25,500. Your home has appreciated by $10,000 but your closing costs of $25,500 exceeds this value because you only bought the house for 1 year.

Rent vs Buy

Should I Buy a House?

Buying is generally recommended if you plan to reside in an area for a long period of time. There are many advantages to buying a home, and these include:

  • No Evictions: If you rent, you are always at risk of being evicted. For example, the Landlord and Tenant Board in Ontario allows landlords to evict tenants if they are selling the property, using it for personal use, or renovating the property. If you own your home, you will almost always have the right to live in it.
  • Rental Income: If you have spare rooms or suites in your new home, you can rent them out for extra income. The rent you collect can help you cover your mortgage payments. To check how much rental income a rental property can generate for you, use WOWA’s Rental Property Calculator.
  • Better Saving Habits: Purchasing a home will help you build better saving habits and become more financially disciplined. Not only do you have to save up for a down payment, but you will also be required to pay mortgage payments every month. These payments can help to keep you financially accountable when it comes to spending.
  • Long Term Investment: A home can be a long-term investment. If property prices in your area rise, you can benefit from the increase when you eventually sell your home. You can also tap into your home equity at very low interest rates using a mortgage refinancing or a Home Equity Line of Credit (HELOC).

Consider this Scenario: Jack and Maggie are newlyweds looking for a place to stay in Vancouver, BC. They are looking for a property with 1 bedroom and 1 bathroom. They are both very career driven and plan to move to California in the next 3 years. Should Jack and Maggie rent or buy a house in Vancouver?

The average rent in Vancouver for 1 bed 1 bath is $2000. The price to purchase a property with similar characteristics is $570K. With savings of $114K (20% of the purchase price), the couple are able to obtain a mortgage pre-approval with RBC. RBC offers them an interest rate of 2.95% for a mortgage with a 25 year amortization. If they buy a home, they will have to pay about $1,668 in property taxes, $1,000 in home insurance, and $5,700 in condo/maintenance fees each year. They will also have to pay $11,300 in closing costs from buying and selling the home. The property’s price will appreciate by 2% per year.

Using the rent vs buy calculator, Jack and Maggie see that they will be paying $73,234 in total costs over the next 3 years if they choose to buy and $72,000 if they choose to rent. The calculator also advises Jack and Maggie that buying will be better if they choose to stay longer than 3.17 years. Since Jack and Maggie hope to move to California in the next 3 years, they decide that renting is more cost-effective.

What are some other expenses for homeowners?

In addition to paying the mortgage and down payment, homeowners also have home ownership and maintenance fees. These include property tax and home insurance expenses. If the home is part of a condo unit, then there are also condo fees.

Property taxes

Property Taxes are taxes that you have to pay if you own a home. They are used by the provincial and municipal governments to pay for services such as libraries, local police, firefighting, education, and health care. Property tax is generally calculated using the assessed value of your property and a tax rate that can be a combination of both municipal and provincial taxes.

Homeowners insurance

Homeowners Insurance is a type of property insurance that covers damages to the interior or exterior of the home, personal assets inside the home, and any personal injuries that occur on the property. It does not cover damages due to wear and tear or typical usage for your home. On average, Canadians pay between $500-$1000 per year for homeowners insurance.

All of the costs of renting vs buying mentioned above are taken into account with the Rent vs Buy calculator. Generally, buying is the better option if you are staying for a longer period of time in a specific location. The calculator will indicate how many years you should plan to stay in a location before buying a home is more profitable in comparison to renting.

Should I Rent?

Renting is generally recommended if you do not plan to stay in an specific location for a long period of time. There are many advantages to renting instead of buying, and these include:

  • Flexibility: Renting gives you the flexibility to move and change location with ease. This might be the case if you plan to upsize or downsize in the near future. You may also need to frequently move for work-related reasons, education, or travel.
  • No Closing Costs or Selling Fees: There are very few fees associated with renting. In contrast, buyers have to pay closing costs such as legal fees, and land transfer taxes while sellers have to pay costs of selling a house including real estate commissions. If you move frequently and buy/sell a home each time, the fees can easily add up.
  • Less Down Payment: The mortgage down payment on a home could be a large amount of money to save up for and pay upfront. When renting, you only need to pay the first and last month rent and sometimes a key or security deposit. Generally, the deposits associated with renting are much cheaper than the down payments on a house, which makes renting a much more affordable option to most people than buying.
  • Less Maintenance: Homeowners are responsible for home maintenance and broken appliances. This can include expenses for maintenance issues such as roof repairs, replacing a washing machine, broken light fixtures, and more. As a renter, these expenses are covered by your landlord. However, depending on your agreements with your landlord, you might be required to pay your own utilities and electricity bills and shovel the snow/mow the lawn.

What should I know before using Rent vs. Buy calculator ?’s Rent vs. Buy calculator can help you determine if renting or buying is a better financial decision for your family. Important factors that you should consider in making this important decision include:

  • Estimated Rent: estimate and enter this amount into the calculator.
  • Purchase Price: estimate the price for a property you would like to own by looking at the prices of homes nearby with similar characteristics. For example, consider the property type (condo, semi-detached, townhouse, detached) and features such as the number of bedrooms and bathrooms.
  • Down Payment: the upfront payment for the property when you first obtain a mortgage. The minimum down payment in Canada depends on the purchase price of the property. It is 5% for properties with a purchase price under $500K. For properties between $500K to $1M, the minimum down payment is 5% for the first $500K and 10% for the remaining portion. For properties with a purchase price of $1M or more, the minimum down payment in Canada is 20% of the purchase price.
  • Mortgage Rate: the interest rate that lenders charge on the mortgage. Your actual mortgage rate will depend on a number of factors including your credit history and down payment. compares rates from different lenders to find you the best mortgage rates in Canada.
  • Amortization Period: the total length of time that you will take to pay off your mortgage. The most common amortization in Canada is 25 years. This is not to be confused with the mortgage term, which is the length of time you sign a mortgage borrowing contract for. The most common mortgage term in Canada is 5 years, and you would renegotiate another agreement after 5 years.

Requity Homes offers a modernized rent-to-own program to aspiring home buyers who aren't mortgage-ready today. They offer terms from two to five years and operate in all major cities throughout Ontario including North Bay, Sudbury, Sault Ste. Marie and Thunder Bay. They even offer cash-out options for renter-buyers if their circumstance changes.

Landlord and Tenant Board

The Landlord and Tenant Board is an adjunctive tribunal that provides dispute resolution services to landlords and tenants. The Residential Tenancies Act is the law that governs relations between landlords and tenants. If you choose to rent, you should be familiar with your rights as a tenant. For instance, in different provinces, landlords are allowed to evict tenants for different reasons. If you are wrongfully evicted or if the landlord evicts you in bad faith, then you may be entitled to eviction protection from the Landlord and Tenant Board and/or monetary claims for damages.

The Landlord and Tenant Board of Ontario allows landlords to evict tenants if the landlord wants the property for personal use, if they are trying to sell the property, or if they plan to renovate/demolish/repair the property.

The Landlord and Tenant Board of Alberta allows landlords to evict tenants if the tenant fails to pay rent, breaks rental agreements, causes damage to the property, or disturbs/endangers others on the premises.

The Landlord and Tenant Board of Saskatchewan allows landlords to evict tenants for many different reasons. These include, but are not limited to, if the landlord or landlord’s family want the property for personal use, if the tenant fails to pay rent or utilities, if the landlord plans to sell the property, or if the landlord plans to demolish or renovate the property.

The Landlord and Tenant Board of British Columbia allows landlords to evict tenants for many different reasons. Some common reasons include: if the landlord wants the property for personal use, if the landlord plans to demolish or renovate the unit, or if the tenant fails to pay rent or utilities.

The Residential Tenancies Act of each province also specifies the maximum percentage rent increase that your landlord is allowed to increase your rent by each year. This ensures that you will not end up paying unreasonable amounts on your rental agreement.

First Time Home Buyer Incentives:

There are three main incentives offered by the government to help a first time home buyer with your home purchase.

The Land Transfer Tax is a tax levied by the provincial government payable at the time of closing. The Land Transfer Tax Rebate is a rebate on the Land Transfer Tax that the provincial government offers to first time home buyers. This rebate can either be for the full or a partial amount of the tax, depending on the province.

The Government of Canada First-Time Home Buyer Incentive is a program that allows you to share 5-10% of your home’s equity with the government. The government will contribute this amount to your purchase, which can be repaid within 25 years. This helps lower the interest on your mortgage and CMHC insurance.

The RRSP Home Buyers’ Plan allows you to withdraw up to $35,000 tax-free from your RRSP to help pay for the purchase of your new home. This amount must be repaid within 15 years.

Key Takeaways’s Rent vs Buy calculator can help you determine if renting or buying is a better financial decision. However, there are also many other factors that affect your decision. These might include how much savings you have for a mortgage down payment, how often you plan on moving, and how much you are willing to pay for the maintenance and upkeep of the property.

The calculators and content on this page are provided for general information purposes only. WOWA does not guarantee the accuracy of information shown and is not responsible for any consequences of the use of the calculator.