Compare the long-run wealth impact—not just rent against a mortgage payment. This model includes Canadian mortgage insurance, closing costs, maintenance, property tax, selling costs and the return your unused cash could earn.
Enter comparable homes: the rent for the kind of place you would rent and the purchase price for the kind of place you would actually buy. All figures are in Canadian dollars.
The mortgage is only one line in the decision. Renting buys flexibility and preserves liquid capital; ownership adds a leveraged asset, control over the space and a long list of carrying and transaction costs.
Rent is payment for housing, maintenance risk transfer and the option to move with comparatively low friction.
A homeowner gets housing plus an equity position whose return is magnified by mortgage leverage—for better or worse.
A mortgage payment contains interest and principal. Interest is a cost; principal becomes equity. But property tax, maintenance, insurance, condo fees and transaction costs do not build equity.
A renter can invest the money not used for a down payment, closing costs and higher monthly ownership costs. This calculator credits that portfolio—and also credits the buyer when owning becomes cheaper month to month.
Compare similar homes and similar lifestyles. A downtown one-bedroom rental is not an honest comparison with a detached home bought farther away. Add commuting changes, parking, utilities and condo fees where they differ. Use after-fee investment returns, not headline stock-market returns, and do not assume that recent home-price growth repeats indefinitely.
Buying concentrates large costs at the beginning and end: land transfer tax and legal work on purchase, then selling commissions and legal costs on exit. Over a short horizon, those costs have little time to be offset by equity growth. Over a long horizon, principal repayment and appreciation can compound—but so can the renter's investment portfolio.
Budget beyond the mortgage. CMHC advises buyers to think about closing costs and notes a range of roughly 1.5% to 4% of the purchase price for costs such as legal fees and land transfer tax.2
| Cost | When it occurs | How this calculator treats it |
|---|---|---|
| Down payment | At purchase | Reduces the base mortgage. The renter invests the same cash instead. |
| Mortgage insurance | At purchase if usually under 20% down | Automatically estimated from CMHC's standard premium schedule and added to the loan. |
| Closing costs | At purchase | Percentage of price; renter invests this amount. |
| Mortgage interest | Monthly | Canadian nominal rate converted using semi-annual compounding; rate is assumed unchanged at renewal. |
| Property tax | Ongoing | Percentage of the home's current modelled value. |
| Maintenance | Irregular, modelled monthly | Annual reserve based on current modelled home value. |
| Insurance and condo fees | Ongoing | Monthly amounts grown with the cost-inflation assumption. |
| Selling costs | At sale | Percentage deducted from the future sale price. |
Neither tenure is universally superior. The stronger choice is the one that fits both the numbers and the life you are actually planning.
Set appreciation to 0%. If the purchase only works with strong price growth, you are making a market forecast—not just a housing decision.
This model holds one rate constant. Re-run it at a rate two percentage points higher to see whether cash flow remains comfortable.
Cut the horizon to 3 or 5 years. Selling costs can overwhelm modest equity growth over a short stay.
The calculator estimates common rules, but a lender or broker decides qualification and an insurer decides coverage.
For homes up to $500,000, the federal minimum is generally 5%. From $500,000 to under $1.5 million, it is 5% of the first $500,000 plus 10% of the remainder. Homes at $1.5 million or more require at least 20% down for this framework.1
With less than 20% down, mortgage loan insurance is typically required. CMHC's standard homeowner premium schedule runs from 0.60% to 4.00% depending on loan-to-value; common high-ratio purchases fall between 2.80% and 4.00%.3
The Financial Consumer Agency of Canada says pre-approval does not guarantee the final mortgage and reminds buyers to reserve cash for closing, moving and ongoing maintenance.4
An FHSA provides $8,000 of participation room in the first year and a $40,000 lifetime limit. The Home Buyers' Plan currently permits up to $60,000 from an RRSP; eligible buyers may use both for the same home.56
Short answers to the questions Canadians ask before treating a calculator result as a decision.
No. Rent buys housing, flexibility and protection from most structural repair costs. Mortgage interest, property taxes, insurance, maintenance and transaction costs are also money spent rather than equity built. The fair comparison is ending net worth and quality of life—not rent versus the full mortgage payment.
Each monthly payment is split into interest and principal using a Canadian semi-annual compounding convention. Principal reduces the mortgage balance and becomes equity. At the selected horizon, the model subtracts the remaining mortgage and estimated selling costs from the home's projected value.
It estimates the standard CMHC premium when the down payment is under 20% and the purchase price is below $1.5 million. The premium is added to the mortgage. Provincial tax on the premium and insurer-specific eligibility or surcharges are not included.
Use a long-term after-fee, after-tax estimate that matches how you would really invest. A diversified portfolio is not guaranteed, and a high assumed return can make renting appear artificially strong. Run a range rather than trusting one figure.
Do not simply copy the strongest recent local period. Try 0%, a moderate long-run case and a downside case. Housing is local, transaction-heavy and volatile over short periods even when national long-run trends look smooth.
Part of the mortgage payment reduces debt, and appreciation acts on the full home value. The model counts both in buyer net worth. It also invests the renter's monthly savings, so the result depends on the full balance-sheet comparison.
It is the first modelled month when buyer net worth meets or exceeds renter net worth, after selling costs. It is not a promise that prices, rates or returns will follow the assumptions, and a crossover may reverse later.
A longer amortization lowers the payment but usually increases lifetime interest and slows equity building. Eligibility for insured 30-year amortizations depends on borrower and property circumstances. Confirm current rules with a lender.
Not necessarily. This is a wealth model, not a mortgage qualification tool. Lenders examine income, debts, credit, property value and proof of down payment and closing costs.
A qualifying principal residence may benefit from the principal residence exemption, but eligibility and reporting depend on your facts. This calculator does not model taxes on the home or the renter's investments.
Official Canadian sources used for the rules and planning ranges on this page. Links open the original guidance.