Rent vs. Buy Calculator

What the Rent vs. Buy Calculator does

This calculator compares the two paths on the same basis: net worth over time, not just monthly cash flow. On the buy side it tracks your home value, your shrinking mortgage balance, and what it would cost to sell. On the rent side it tracks what your down payment and closing costs would be worth if invested instead, plus every month that renting turns out to be cheaper than owning.

That second piece — the opportunity cost of the money that goes into a down payment — is the step most rent-vs-buy calculators skip, and skipping it quietly biases the whole comparison toward buying. This one includes it, along with the tax asymmetry between a principal residence and an investment portfolio, and reports the exact year, if any, that buying pulls ahead.

• The crossover year — the point where buying's net worth overtakes renting and investing the difference
• A month-one cash-flow comparison, honest about the near-term gap between the two
• Net worth for both paths at your chosen time horizon, in full
• A sensitivity grid across a realistic range of appreciation and investment return assumptions
• Every assumption used, listed plainly so you can change any of them

The key variables that move the answer — and how lenders treat them

Two assumptions decide most of the outcome, and neither one is something a lender or an underwriter has a strong opinion on — they are genuinely your call, not a fact to look up.

• Home price appreciation — the single biggest lever in this calculator. A percentage point of difference here can move the crossover year by several years in either direction, which is exactly why it is a slider and why the sensitivity grid exists rather than a single confident number.
• Investment return on savings — the return the renter earns on the down payment instead of putting it into a home. A higher assumed return makes renting look better for longer; a lower one shortens the crossover. Lenders do not weigh in on this number at all, but it is just as important to the honest answer as the mortgage rate.
• Time horizon — the shorter your horizon, the more closing costs and selling costs dominate the comparison, which almost always favours renting. A five-year stay and a twenty-five-year stay can produce completely different answers from the same purchase price.
• Down payment size — lenders care about this for qualification and insurance premiums, but in this calculator it also sets the size of the renter's starting investment. A larger down payment means a larger opportunity cost being given up by buying, not just a smaller mortgage.

How this is actually calculated

The buy path amortizes your mortgage month by month at your contract rate, compounded semi-annually as Canadian fixed-rate mortgages require, and grows the home value at your appreciation assumption compounded monthly. Buy net worth at any point is home value minus the remaining mortgage balance minus an estimated 5% of home value in selling costs — commission and legal fees, the standard planning convention.

The rent path starts with a lump-sum investment equal to exactly what buying would have cost to close — down payment, land transfer tax, legal fees and title insurance — then adds a monthly contribution in any month renting is cheaper than owning that month. Both grow at your assumed investment return, compounded monthly. At the horizon, the portfolio's gains — not the whole balance, only the growth above what was actually contributed — are taxed at your marginal rate, because a principal residence is capital-gains exempt in Canada and a taxable investment account is not.

The crossover year is simply the first year, working forward from today, at which buy net worth is greater than or equal to rent net worth. The sensitivity grid reruns the entire simulation across a range of appreciation rates from 0% to 5% and investment returns from 3% to 8%, so the single headline number sits inside an honest range rather than standing alone.

• Buy net worth = home value − mortgage balance − (home value × 5% selling costs)
• Rent investment = time-zero lump sum + monthly contributions whenever renting is cheaper, compounded at the investment return
• Rent net worth = portfolio value − (portfolio gains × marginal tax rate)
• Crossover year = first year buy net worth ≥ rent net worth

What you get, and how the numbers hold up under scrutiny

Every figure here is meant to survive a second look, which is why the assumptions are listed openly rather than buried inside the math, and why the sensitivity grid is a required output, not an optional extra.

• Crossover year — the direct answer to "is it better to rent or buy," conditional on the assumptions shown, never presented as a guarantee.
• Net worth at horizon — the number that actually matters if you are trying to build wealth rather than just minimize a monthly payment.
• Monthly cost comparison — the number people feel every month, shown honestly even when it favours renting in the near term.
• Sensitivity grid — shows you exactly how fragile or robust the crossover year is to the two assumptions that matter most, rather than hiding that uncertainty behind a single confident figure.
• Upfront cash — connects directly to the closing costs and land transfer tax calculators on this site, since that cash is the entire starting point of the opportunity-cost comparison.

Using your results well

Do not anchor on the single crossover year from your default assumptions — move the appreciation and investment return sliders across the sensitivity grid's range and see how much the answer actually moves. If the crossover year barely changes across a realistic range, that is a much stronger signal than any single number could be. If it swings by a decade, the honest conclusion is that the decision is closer than it looks and other factors — stability, lifestyle, flexibility — should weigh more heavily.

What this calculator deliberately does not do is tell you to buy. It is built to be fair to both paths, including the tax advantage a principal residence genuinely has and the opportunity cost a down payment genuinely carries, precisely because a calculator that leans toward buying is not useful to anyone deciding between the two.

• Test your actual planned time horizon, not a generic 10-year default
• Move both sliders across the sensitivity grid before trusting one crossover year
• Remember maintenance, selling costs and land transfer tax are real and are all included here
• Weigh non-financial factors — stability, mobility, control over your space — alongside the net worth answer
• This is not tax or investment advice; confirm your own assumptions with an advisor before acting on them

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