How to decide between buying and renting

Step 1: Decide how long you will realistically stay

Time horizon is the single biggest lever. Buying carries closing costs on the way in and selling costs on the way out, so a short stay rarely gives equity enough time to overcome them. Be honest about job changes, family plans and how likely you are to want a different kind of home in a few years.

Use a range, not a point. If you might stay anywhere from four to twelve years, run the numbers at both ends and at the middle. The guide on time horizon goes deeper.

Step 2: Put all-in monthly costs side by side

Compare the full monthly cost of owning, not just the mortgage payment. Add property tax, home insurance, a maintenance allowance, any condo fees and the utilities you would pay as an owner. Then compare that with rent plus tenant insurance for a comparable home.

Suppose a $600,000 home with 20% down at 4.5%, a 25-year amortization, Alberta-style costs and a comparable rental at $2,300 a month. The calculator shows the owner paying about $3,757 in month one and the renter about $2,325. The mortgage payment alone, $2,657, understates the gap by more than $1,000 a month. These are illustrative inputs, not market figures.

Step 3: Count the upfront cash and what else it could do

The down payment and closing costs are not a sunk cost, but they are not free either. In the example, the buyer's total upfront cash is $126,380: the $120,000 down payment, $4,880 of closing costs and $1,500 of moving. A renter can invest that money instead. The comparison assumes they do, which is why it is fair to treat the down payment as an opportunity cost.

Check which registered accounts you could use. Renters can use TFSA, RRSP and FHSA room as well, so these accounts are not an advantage exclusive to owners.

Step 4: Stress-test the three biggest assumptions

Home-price growth, rent growth and investment returns are guesses. Rather than argue about the right guess, ask how wrong it can be before your answer changes. For the $600,000 example over ten years, the calculator finds these break-even points, where buying and renting finish equal:

Step 5: Look at the downside, not just the middle

Averages hide risk. A simulation that randomly varies yearly home and investment returns around the base case, using a 6-point spread for home prices and 12 points for investments, finished with buying ahead in about 61% of 1,000 paths. The middle outcome was about +$44,850 in favour of buying, but the 10th percentile was about −$153,622 and the 90th about +$241,830.

Those figures describe the spread of possibilities under invented volatility assumptions, not a prediction. They do show that a positive average can sit beside a real chance of ending behind. The probability tool lets you try your own settings.

Step 6: Check the specific ways your plan could break

Run a few targeted what-ifs. In the same example, a renewal rate of 6.5% after the first five-year term turns the +$41,686 ten-year result into −$2,113. Maintenance at 2% of value instead of 1% turns it into −$49,807. Rent that never grows (0% a year) gives −$6,229. Each is plausible and each is large enough to flip the answer.

If your result survives the scenarios that worry you most, you can lean on it more. If it flips under a modest change, it is a close call, and non-financial factors should carry more weight.

Bring in what the model cannot price

After the numbers, ask what they leave out: how much you value being able to renovate or stay put, how costly a repair surprise would be for your cash flow, and how secure your income is. Our checklist collects these questions, and the guide on flexibility covers the trade-offs in more depth.

This page is educational and does not replace personalized advice. For decisions involving mortgage qualification, taxes or legal terms, speak with a qualified professional.