Question 1

Is it better to rent or buy a home in Canada right now?

Accepted Answer

There is no universal answer — it depends on your specific numbers. At current Canadian prices and mortgage rates, monthly ownership costs (mortgage + property tax + maintenance) often exceed rent for comparable properties, especially in Vancouver and Toronto. However, buyers build equity and benefit from home price appreciation, while renters keep their capital liquid for investment. This calculator runs the exact comparison for your inputs. The break-even point typically falls between 5 and 15 years, depending on home price growth, investment returns, and how much rents rise over time.

Question 2

What is the opportunity cost of a down payment?

Accepted Answer

Opportunity cost is what your down payment could have earned if invested instead of used to buy a home. If you put $150,000 down on a house, the opportunity cost is the investment return you forgo — historically around 7% annually in a diversified Canadian equity portfolio. This calculator invests the renter's equivalent down payment at your chosen return rate and compares it to the buyer's growing equity. The opportunity cost is one of the most underappreciated factors in rent vs buy math.

Question 3

How does CMHC insurance affect the rent vs buy comparison?

Accepted Answer

CMHC mortgage default insurance is required when your down payment is less than 20% of the purchase price. The premium (2.80%–4.00% of the insured mortgage, depending on your down payment) is added to your mortgage and paid back over your amortization, with interest. This adds thousands to your total cost of buying. On a $750,000 home with 10% down, the CMHC premium is $20,925 — and with interest over 25 years, the true cost is considerably more. This calculator includes the CMHC premium in the buyer's mortgage automatically.

Question 4

Does the calculator include land transfer tax?

Accepted Answer

Yes. Land transfer tax (LTT) is a one-time provincial tax paid at closing when you buy a home. Ontario and British Columbia have LTT; Alberta and Saskatchewan do not (small flat registration fees instead). Ontario also has a separate Toronto LTT for city properties. First-time buyer rebates apply in Ontario, BC, and Prince Edward Island. This calculator uses your selected province and first-time buyer status to calculate the exact LTT owed and deducts it from the buyer's starting position — since the renter keeps that money to invest.

Question 5

Why does the calculator deduct realtor fees from the buyer?

Accepted Answer

When you sell your home, you typically pay a commission of around 4–5% of the sale price split between buyer and seller agents. On a home that has appreciated to $900,000, that's $36,000–$45,000 off the top before you receive any proceeds. This calculator subtracts 4.5% realtor fees from the buyer's final sale value to show what they'd actually net, making the comparison to the renter's investment pool accurate. If you're holding the home for much longer (30+ years), this cost matters less as a percentage of total wealth.

Question 6

Are capital gains on a Canadian home taxable?

Accepted Answer

No — if the home is your principal residence for every year you own it, the capital gains on sale are completely exempt from tax under Canada's principal residence exemption. This is a massive advantage for homeowners compared to investors in taxable accounts. This calculator assumes the home is the buyer's principal residence throughout, so the full home equity goes to the buyer with no capital gains deduction. (Renters investing in an RRSP or TFSA can also achieve tax-sheltered growth — adjust your investment return assumption accordingly.)

Question 7

What investment return rate should I use for the renter?

Accepted Answer

A conservative estimate is 5–6% for a balanced portfolio; 7–8% for a portfolio weighted toward Canadian and global equities historically. The S&P/TSX Composite has returned approximately 7% annually over long periods, though past performance is no guarantee. If the renter is investing in a TFSA (tax-free) or RRSP (tax-deferred), the effective return is higher. If investing in a taxable account, reduce the rate slightly to account for capital gains and dividend taxes. The calculator is sensitive to this input — try a range to understand its impact.

Question 8

What home appreciation rate should I assume in Canada?

Accepted Answer

National Canadian home prices have appreciated about 5–7% annually over the past 20 years, but this masks enormous regional variation — Toronto and Vancouver drove much of that. Looking back further, or using a broader measure, 3–4% is often cited as a more sustainable long-run expectation. The calculator defaults to 3%. Notably, the 2020–2022 period was an outlier driven by pandemic demand and low rates that has since partially corrected. Using a conservative appreciation assumption produces a more realistic long-term projection.

Rent vs Buy Calculator Canada

Rent vs buy in Canada — common questions