Rent vs Buy Calculator

How this comparison works

Most rent-vs-buy takes compare monthly payments — wrong, because part of the mortgage payment is forced savings (principal) and most ownership costs hide elsewhere. This calculator compares net worth at the end of your horizon:

• The buyer ends with: home value grown at your appreciation rate, minus the remaining mortgage, minus ~5% selling costs. Along the way they pay the mortgage, property tax (~0.9%/yr), maintenance (~1%/yr), and ~1.5% closing costs at purchase.
• The renter invests the down payment and closing costs on day one, then invests (or draws) the monthly difference between owning and renting, compounded at your investment return.

Whoever ends with more wins. No hand-waving about "throwing money away" — interest, tax, and maintenance are thrown away too.

Canadian specifics baked in

• Semi-annual compounding on the mortgage, as Canadian law requires.
• Transaction costs both ways — land transfer tax hurts at purchase (run your exact figure with the land transfer tax calculator; Toronto buyers, brace), realtor commissions at sale.
• Principal residence exemption — the buyer's gains are tax-free; we assume the renter invests inside a TFSA so their growth is too. In a taxable account the renter's return would be ~1–1.5 points lower after tax.

The two assumptions that decide everything

Home appreciation and investment return — a 1-point swing in either flips typical outcomes. Canadian home prices have averaged ~5%/yr over the past 30 years nationally (far more in Toronto/Vancouver, less elsewhere); diversified equities ~7%. Using long-run averages for both is the honest default; tilting either input toward what you actually believe is the honest analysis.

What the math can't price

• Forced savings. Mortgages make undisciplined people build equity. A renter who doesn't invest the difference just has a nicer lifestyle and less money.
• Mobility. Selling inside 3–5 years usually loses to renting because of transaction costs — if your job or relationship might move you, discount the buy case heavily.
• Renoviction risk vs rate risk. Renters face renovictions and 2.5%+ annual increases; owners face renewal-rate shocks (2022–2024 proved it). Both are real.
• The life stuff. Kids' schools, a yard, painting walls without permission. Run the math, then let the math lose if the life wins.