Rent vs buy calculator

No — that framing ignores the owner's own unrecoverable costs. A buyer "throws away" mortgage interest, property taxes, maintenance, insurance, and eventually selling costs; only the principal portion of the payment builds equity. A renter throws away rent but can invest the down payment and any monthly savings. The honest comparison is unrecoverable cost vs unrecoverable cost, with the difference invested — which is exactly what this calculator simulates, month by month.

CMHC's guidance: closing costs are "equivalent to 1.5% to 4% of the purchase price" — legal fees, inspections, and above all land transfer tax. In Ontario the LTT runs 0.5%–2.5% in brackets (first-time buyers get up to a $4,000 refund); Toronto charges a second, municipal LTT on top (up to a $4,475 first-time rebate, and luxury tiers up to 8.6% above $20M since April 2026); BC's property transfer tax is 1%–3% plus 2% on value over $3M. Selling later costs realtor commission — negotiated, typically a few percent — plus legal fees. These round trips are why short ownership horizons favour renting.

Nobody can verify a forward number, so it's an input, not a promise. For context, Statistics Canada's New Housing Price Index and the Teranet–National Bank repeat-sales index are the citable Canadian price series; long-run national appreciation has historically landed in the low single digits above inflation, with brutal regional variation and decade-long flat stretches. The more useful output is the breakeven appreciation rate this calculator reports — if your market needs 4%+ forever for buying to win, that's worth knowing.

It's a planning convention, not a regulation — budgeting roughly 1% of the home's value per year for upkeep and eventual big-ticket items (roof, furnace, windows). CMHC's own published advice is framed differently: save about 5% of your take-home pay for homeownership expenses. Older homes, harsh climates, and condos with weak reserve funds run higher; adjust the input to your situation. Whatever the number, it's an unrecoverable cost renters don't pay directly.

The default 6% is a balanced-portfolio assumption before inflation — deliberately conservative against long-run equity returns. The comparison is sensitive to this input in both directions: at 7–8% (all-equity in a low-cost ETF, ideally inside a TFSA/RRSP) renting wins far more often; at a savings-account 2–3% it rarely does. The honest framing: buying is a forced-savings leveraged bet on one asset; renting-and-investing requires the discipline to actually invest the difference.

Insurance yes — under 20% down, the CMHC-style premium (2.8%–4.0% of the loan by loan-to-value) is added to the mortgage automatically. The stress test isn't needed here because this tool assumes you can buy and asks whether you should; whether you qualify at all is the affordability calculator's job, and the qualifying-rate math lives in the stress-test calculator.