Is It Cheaper to Rent or Buy in Ontario?
Month to month, renting usually costs less. But a mortgage payment isn’t the same as rent: part of every payment pays down your own loan, while rent is gone once it’s paid. A fair comparison has to count what you keep as well as what you spend.
Take the calculator’s starting numbers: $2,500 rent against a $500,000 Toronto home with 20% down at 4.45%. Owning costs about $153 more a month, and renting stays ahead for roughly the first three years while closing and selling costs are recovered. By year five, buying is ahead by about $56,000, assuming prices grow 2.3% a year. Your result will differ, especially at GTA prices, so enter your own numbers above.
What This Rent vs Buy Calculator Counts
Most comparisons stop at the monthly payment. This one also counts what your down payment could earn if you invested it instead, your closing costs, a 5% selling cost, yearly rent increases and home price growth. If you plan to rent out a suite, you can add that income too.
Every assumption can be changed. Ontario’s rent increase guideline is 1.9% for 2027, but most units first occupied after November 15, 2018 aren’t covered by it. If you rent in a newer condo, test a higher rent increase to see how your result changes.
Rent vs Buy in Ontario — Common Questions
Rent vs Buy FAQ for Ontario Renters
Monthly costs, down payments, and how long you need to stay before buying pays off.
Usually, yes. On top of your mortgage you pay property tax, home insurance and maintenance, and those costs are yours instead of a landlord’s. The difference is that part of each mortgage payment goes to principal, which you keep as equity. Rent builds no equity, but it also leaves your down payment free to invest.
It depends on your numbers, because closing and selling costs take time to recover. At the calculator’s starting numbers, renting leads for about the first three years and buying leads after that. Check the Analysis Period bar in your results to see the year your own result flips.
The minimum down payment is 5% of the first $500,000 and 10% of the portion from $500,000 up to $1.5 million. Homes priced at $1.5 million or more need 20% down. A $700,000 home needs at least $45,000 down, plus closing costs. To see what you could qualify for, try the maximum mortgage calculator or read the first-time buyer guide.
It starts with 2.3% home price growth, a 2.1% rent increase, a 5% investment return, a 4.45% mortgage rate and a 30-year amortization. These are starting points, not forecasts, and you can change each one. Try lower home price growth to see how much your result depends on it.
Renting often wins if you expect to move within a few years, your rent is far below the cost of owning a similar home, or buying would use up your emergency savings. It’s also the safer option if your income may change soon. If your numbers are close, talk to a licensed mortgage agent before deciding.
Still Have Questions?
Not seeing your exact situation here? Let’s take a look at your numbers and walk through your options step by step.
