Budget Beavers Rent vs. Buy Calculator Canada
Break-even analysis with opportunity cost of down payment — the gap every other calculator misses.
Buying side
Closing costs include LTT, legal fees, HST on services (~3% total). Selling costs include realtor commission + legal (~5%).
Renting side
Shared assumptions
▶ Why we include the opportunity cost of the down payment
The field's biggest math gap: most rent-vs-buy calculators compare mortgage payments to rent payments and declare a winner. This is wrong because it ignores what the renter does with the money they didn't spend on a down payment.
If you put $150,000 down on a house, you've tied up $150,000 that could have been invested in a diversified portfolio earning ~7%/year. Over 10 years, that $150,000 grows to approximately $295,000. The buyer builds equity too — but only through appreciation and mortgage paydown.
How we model it:
- Renter net worth = down payment invested at market return + any monthly savings invested (if renting is cheaper month-to-month)
- Buyer net worth = home value − remaining mortgage − selling costs + any monthly savings invested (if buying is cheaper month-to-month)
The "break-even year" is when buying's net worth curve finally crosses the renter's curve. Before that crossover, the renter is ahead on a total-wealth basis.
Net Worth Over Time: Buy vs Rent — includes opportunity cost of down payment
About the Canadian Rent vs Buy Calculator
Why most rent vs buy calculators are wrong
The most common mistake: they compare the cash flow of renting vs buying — "your mortgage is $2,800/month and rent is $2,200/month, so renting saves you $600/month." That's not the right comparison. The right question is about net worth after N years, which requires accounting for what the renter does with their down payment and monthly savings.
A $150,000 down payment is $150,000 that doesn't go into the stock market. If invested in a 60/40 balanced portfolio returning 7%/year, it grows to approximately $295,000 over 10 years. The buyer builds equity through appreciation and mortgage paydown — but does that beat $295,000 in the renter's portfolio? That's the question this calculator answers.
The break-even year: what it means
The break-even year is when the buyer's total net worth (home equity after selling costs) first surpasses the renter's total net worth (invested portfolio). Before the break-even year, the renter is ahead in total wealth. After it, the buyer is ahead. If you plan to stay longer than the break-even year, buying likely makes more financial sense. Shorter, and renting wins on a pure numbers basis.
For standard Canadian inputs (20% down on a $750k home, 4% appreciation, 7% investment return), the break-even year typically falls between year 7 and 12. This matches the general "stay at least 5–7 years if you buy" rule of thumb.
Canadian-specific costs included
Closing costs (~3%): Ontario Land Transfer Tax runs approximately 0.5%–2% on home price, plus Toronto's additional municipal LTT (~0.5%–2.5%), legal fees (~$1,500–$2,500), title insurance, and HST on services. BC charges 1% on first $200k, 2% on $200k–$2M. Alberta has no LTT (only small flat fees). We use 3% as a reasonable national average.
Selling costs (~5%): Realtor commissions in Canada typically run 3–5% of sale price (split between buyer's and seller's agents). Add legal fees at sale and there's a clear 4.5–6% total selling cost. We default to 5%.
CMHC mortgage insurance: If your down payment is less than 20%, CMHC insurance is required. At 5% down, the premium is 4% of the loan amount — added to the mortgage principal. This increases monthly payments and slows equity building, pushing the break-even year later.
The biggest sensitivity driver: investment return assumption
Changing the investment return from 5% to 9% can shift the break-even year by 3–5 years. If you believe markets will return 10%+ (S&P 500 historical average), renting + investing looks significantly better. If you believe 5% is more realistic (bond-heavy portfolio), buying looks better sooner. This is the single most important assumption — model it at multiple rates to see the range.
What this calculator does NOT model
- Tax deductibility of mortgage interest: In Canada, mortgage interest on your principal residence is NOT tax-deductible (unlike the US). No adjustment needed here.
- Principal residence exemption: Capital gains on the sale of your principal residence are exempt from tax. Appreciation in this model is therefore pre-tax for the buyer.
- Non-financial value of homeownership: Stability, ability to renovate, pets, pride of ownership. These are real and important — but not quantifiable here.
- Variable-rate mortgages: We assume a fixed rate throughout. Rates will renew at unknown future rates.
Not financial advice. This calculator provides estimates for informational and educational purposes only. Housing markets, interest rates, and investment returns are unpredictable. Always consult a licensed financial planner or mortgage broker before making housing decisions. Calculations run entirely in your browser — no data is sent to any server.
Related calculators
- Mortgage Calculator (Canada) — Accurate Canadian mortgage payment with semi-annual compounding, CMHC, stress test.
- Canadian Income Tax Calculator — Find your marginal rate to use in this calculator.
- Investment Projection — See how the renter's invested portfolio grows over time.