Buy vs rent: frequently asked questions

Neither is better for everyone. It depends on how long you will stay, the price, your mortgage rate, rent, and what you would do with the money otherwise. Start with what buy vs rent means and test your own numbers.

It compares the long-run financial position of a household that buys a home with one that rents and invests the difference. This site's main calculator shows the result, the break-even point and how sensitive it is to your assumptions.

Buying carries costs at both ends, so short stays usually favour renting. In the default illustrative example, buying overtakes renting after about 5.7 years, but your break-even depends on your inputs; see time horizon.

It is the first month from which buying stays ahead of renting after selling costs are counted. A crossing that later reverses does not count. The break-even guide explains it in detail.

Not necessarily. Rent pays for housing and flexibility, just as ownership costs such as interest, property tax and maintenance also pay for housing without building equity. See buy vs rent myths.

It is a quick screen that compares a home's unrecoverable ownership costs with rent. It is a rough test and not a decision; read the 5% rule for how to use it.

They are costs you do not get back, such as mortgage interest, property tax, insurance, maintenance and selling costs. Principal repayments, by contrast, build equity. See hidden costs of owning.

They usually include legal fees, title insurance, an inspection, any transfer taxes or registration fees and other adjustments. Amounts vary, and the closing costs tool estimates them by province.

The calculator defaults to 1% of the home's value per year as a planning assumption, but older homes can cost more. Test a higher figure in maintenance and repairs.

A condo fee is a regular charge for shared costs, and a special assessment is a one-time charge when the reserve fund and fees fall short. Read the documents carefully; see condo fees and special assessments.

Typically commission, GST on the commission, legal fees and possibly a mortgage penalty. They reduce what an owner keeps, so they push the break-even later; see selling costs.

Yes, home insurance is typically larger because it covers a building, while tenant insurance covers belongings and liability. Compare them in home insurance vs tenant insurance.

The federal minimum is 5% of the first $500,000 plus 10% of the portion from $500,000 to under $1.5 million, and 20% at $1.5 million or more. Under 20% down requires mortgage default insurance.

It is the mortgage default insurance premium charged when you put down less than 20%: 4.00% of the loan for 5% to 9.99% down, 3.10% for 10% to 14.99% and 2.80% for 15% to 19.99%, plus 0.20% if the amortization exceeds 25 years. It is usually added to the mortgage; see CMHC insurance.

You must qualify at the greater of your contract rate plus 2 percentage points or 5.25%. Straight switches at renewal for uninsured mortgages are generally exempt (confirm). See the stress test guide.

Amortization is the total time to pay off the mortgage, normally 25 years for insured mortgages, while the term is the period your rate is fixed, such as five years. At the end of each term the mortgage renews; see renewal risk.

Insured mortgages can use 30 years for first-time buyers and buyers of newly built homes (rule effective December 15, 2024; confirm eligibility). A longer amortization lowers the payment but costs more interest and adds 0.20% to the insurance premium.

Your payment could rise, and that is a real risk for owners. Test a higher renewal rate in the calculator; the renewal risk guide explains how.

Canadian law requires fixed-rate mortgages to compound semi-annually, while variable rates are typically quoted with monthly compounding. The calculator models both; see mortgage types.

Common sources are savings, a first home savings account (FHSA), the RRSP Home Buyers' Plan and a TFSA. See down payment sources and the FHSA tool.

It works only if the renter actually invests the difference consistently, and returns are not guaranteed. The model assumes that discipline; see rent and invest the difference.

It depends on the province. Alberta has no rent-control cap, but increases still require proper written notice, while other provinces set guidelines. Check your province's tenancy board; see rent control by province.

Rent can rise, a landlord may end a tenancy for permitted reasons, and you do not build equity. Renters gain flexibility and avoid repair and sale costs. See renting risks and rights.

Yes. Registered-account room is not exclusive to buyers, and savings in these accounts compound tax-free or tax-deferred. Renters investing the difference can use that room.

Generally yes, because moving costs are lower than selling and buying costs. That flexibility is valuable when your plans are uncertain; see flexibility.

No. The defaults are illustrative planning assumptions chosen to form one consistent example. Replace them with your own inputs; see assumptions.

Both households spend the same total monthly housing budget, and whoever spends less invests the difference. The renter also invests the cash the buyer spent at closing. The methodology page explains the full model.

It is the share of simulated runs in which buying finishes ahead, using randomly varied home-price growth and investment returns. It is illustrative, not a forecast; see the probability tool.

Usually time horizon, home appreciation, rent growth and investment return. Test a range using sensitivity analysis.

Nominal dollars are future amounts at face value, while real dollars are adjusted for inflation to show purchasing power. The calculator can show both; see real vs nominal.

Inputs are processed in your browser, and any saved scenarios stay on your own device. See the privacy page for details.

No. Mortgage interest and property tax on a principal residence are not tax-deductible, unlike in the United States.

The gain on a home that qualifies as your principal residence is generally tax-free, and the sale must be reported on your tax return. Different rules apply to rental use, partial business use and non-residents; see principal residence exemption.

No. Alberta charges Land Titles fees of $50 plus $5 per $5,000 of value on the transfer and again on the mortgage. See land transfer tax.

The First Home Savings Account has an $8,000 annual contribution limit and a $40,000 lifetime limit. Contributions are deductible and qualifying first-home withdrawals are tax-free; check current carry-forward rules.

It lets you withdraw up to $60,000 per person from your RRSP for a first home, repaid over time. Confirm the current rules before you rely on it.