The Rent vs Buy Calculator compares two wealth paths over a chosen time horizon. The buyer path tracks home equity growth (appreciation-adjusted home value minus the remaining mortgage balance) less buying transaction costs. The renter path tracks the down payment invested at a chosen return, plus the monthly difference between the all-in buyer cost and rent, compounding at the same return. The crossover year is the first year buyer net worth meets or exceeds renter net worth.
When does buying overtake renting?
Under default inputs ($650,000 home, 10% down, 5.5% mortgage rate, 25-year amortization, 3% annual home appreciation, $2,200 starting rent, 3% rent increase, 6% investment return), buying typically overtakes renting between year 8 and year 12. The crossover year shifts earlier with higher appreciation, lower investment returns, lower rent, or higher down payment, and shifts later or disappears with the reverse. The calculator updates the crossover year live as inputs change.
How the calculator works
Buyer net worth path
The home value compounds at the chosen annual appreciation rate. The mortgage amortizes monthly using the standard PMT formula. Buyer net worth at each year is home value minus remaining mortgage balance minus 2% buying transaction costs (land transfer tax, legal, inspection, title insurance). If the down payment is below 20%, CMHC mortgage default insurance is added to the mortgage balance using the 2024 premium schedule (4.0% for 5%–9.99% down, 3.1% for 10%–14.99%, 2.8% for 15%–19.99%).
Renter net worth path
The down payment is invested in year zero at the chosen annual return. Each month, the renter’s portfolio grows by the monthly return and receives the difference between the buyer’s all-in monthly cost and the current month’s rent. If buyer cost exceeds rent (the typical case in the early years of a high-rate market), the surplus is invested. If rent exceeds buyer cost (which can happen when rent has compounded for many years), the renter draws from the portfolio to cover rent.
Buyer all-in monthly cost
The calculator’s buyer monthly cost includes the mortgage principal-and-interest payment, property tax at 1.0% of purchase price per year, maintenance at 1.0% of purchase price per year (the CMHC 1% maintenance rule), and home insurance at $150 per month. Strata fees, special assessments, condo board levies, and major capital projects are not modelled and would push the monthly cost higher for condo buyers.
Crossover year
The crossover year is the first year (looking at year-end snapshots) where buyer net worth equals or exceeds renter net worth. If no crossover occurs within the chosen horizon, the calculator reports “No crossover” and the comparison defaults to the final-year winner. The crossover marker is rendered as a circle on the buyer path in the chart.
Verified against source
CMHC mortgage default insurance premium schedule: CMHC — Mortgage loan insurance cost. CMHC 1% maintenance rule: CMHC household budget guidance. Mortgage payment formula (PMT) is the standard amortization formula used by Canadian lenders.
CMHC mortgage default insurance premium schedule (2024)
| Down payment | CMHC premium (% of mortgage) |
|---|---|
| 5% – 9.99% | 4.00% |
| 10% – 14.99% | 3.10% |
| 15% – 19.99% | 2.80% |
| 20% or more | Not required |
The premium is added to the mortgage balance and amortized over the chosen mortgage term. Provincial sales tax on the premium (Ontario, Quebec, Saskatchewan) is paid at closing in cash and is not modelled in the calculator.
Worked example: $650,000 home, 10% down, 25-year mortgage
Down payment is $65,000. CMHC premium at 10% down on a $585,000 base mortgage is 3.1% of $585,000, or $18,135. Total mortgage including CMHC is $603,135. At a 5.5% rate over 25 years, the monthly mortgage payment is approximately $3,701. Adding 1% per year property tax ($542), 1% per year maintenance ($542), and $150 insurance brings the all-in monthly cost to approximately $4,935.
Year zero buyer net worth is $650,000 (home value) minus $603,135 (mortgage) minus $13,000 (2% buying transaction costs), or approximately $33,865. Year zero renter net worth is the $65,000 down payment invested in year zero. The renter portfolio grows at the chosen return and receives the monthly difference between $4,935 and the current month’s rent.
Edge cases and rules not captured
Selling costs
Real estate commission of 4% to 6% of the sale price plus legal and discharge fees are not deducted from buyer net worth in this chart. A 5% selling cost on a $1,000,000 future home value would reduce buyer net worth by $50,000 in the year of sale. Buyers who plan to sell within the horizon should mentally subtract approximately 5% of the projected home value from the calculator’s buyer net worth figure.
Renter behaviour assumption
The calculator assumes the renter invests the down payment in year zero and invests every month of buyer-cost-minus-rent surplus going forward. A renter who does not invest the surplus (the most common real-world outcome) will end with substantially less wealth than the renter path shows. The comparison is renting-and-disciplined-investing versus buying, not renting-and-spending versus buying.
Tax treatment
The buyer’s principal residence is exempt from capital gains tax under section 40(2)(b) of the Income Tax Act, so the home value at sale is included at its full appreciated value. The renter’s investment portfolio is subject to capital gains tax (in a non-registered account), TFSA-tax-free, or RRSP-tax-deferred treatment depending on the account. The calculator treats the renter’s portfolio as if held in a tax-sheltered account (TFSA or RRSP), which favours the renter slightly over a non-registered investor.
Mortgage rate renewal
Canadian mortgages typically renew every 1, 3, or 5 years at the prevailing rate. The calculator holds the rate constant over the full amortization. A renewal at a higher rate increases the monthly cost (and the renter surplus) from the renewal year forward; a renewal at a lower rate does the opposite. The mortgage rate input represents the average rate over the horizon.
Property tax variation
The 1% property tax assumption is a Canadian average. Toronto residential property tax in 2024 was approximately 0.72%, Vancouver was approximately 0.28%, Calgary was approximately 0.84%, Montreal was approximately 0.78%, and Halifax was approximately 1.20%. Buyers in low-tax cities will see lower buyer monthly cost and earlier crossover; buyers in high-tax cities (or certain rural townships) will see the reverse.