What is the break-even year for buying?

It is the year at which the net worth from buying overtakes the net worth from renting and investing the difference. Before that year, renting usually leaves you ahead because buying front-loads large costs like the down payment, closing costs, and CMHC insurance.

Do I need 20% down to buy in Canada?

No. You can buy with as little as 5% down on the first portion of the price, but with less than 20% down you must pay for CMHC mortgage default insurance, which is added to your mortgage. Twenty percent down avoids that insurance.

Rent vs Buy in Canada: The Break-Even Math (2026)

Q: Is renting really throwing money away?

No. Rent buys you housing with no maintenance, property tax, or interest costs, and it frees up cash you can invest. Buyers spend money that never builds equity too, on mortgage interest, property tax, insurance, and upkeep. The fair comparison is total cost of owning versus total cost of renting plus the invested difference.

"Rent is just throwing money away." It is the most repeated line in Canadian real estate, and it is only half true. Buying comes with its own pile of money that never turns into equity: mortgage interest, property tax, insurance, maintenance, and the closing costs you pay just to get in the door. The real question is not rent versus buy in the abstract. It is which one leaves you with more wealth after a specific number of years.

The short version. Buying usually wins if you stay long enough to pass the break-even year. Renting often wins over shorter horizons, because buying front-loads huge one-time costs and a renter can invest the difference.

What each side really costs

The buyer's money that vanishes

Not every dollar a buyer spends builds equity. Each month a chunk goes to mortgage interest, and on top of that sit property tax, home insurance, and maintenance, plus condo fees if it applies. Up front there are closing costs, most notably land transfer tax, legal fees, and the inspection. None of that comes back when you sell.

The renter's money that vanishes, and the part that does not

A renter's payment is a pure cost, with no maintenance, property tax, or interest. But a renter who buys nothing also has a smaller cash outlay and no down payment tied up. Invested consistently, that difference compounds. A fair comparison credits the renter for the growth on the money they did not sink into a home.

The break-even year is the whole game

Plot two lines over time. One is your net worth if you buy: home equity growing through paydown and appreciation, minus selling costs someday. The other is your net worth if you rent and invest the difference. Early on the renter is ahead, because buying burns the down payment, closing costs, and mortgage insurance right away. At some point the owner's line crosses above the renter's. That crossover is the break-even year, and it is the single most useful number in this decision. If you expect to move before it, renting likely wins. If you will stay well past it, buying likely wins.

What is specific to Canada in 2026

The FHSA. The First Home Savings Account lets first-time buyers contribute up to $8,000 per year, to a $40,000 lifetime maximum. Contributions are tax-deductible like an RRSP, and qualifying withdrawals to buy a first home come out tax-free like a TFSA. It is one of the strongest tools a Canadian first-time buyer has.
CMHC insurance under 20% down. You can buy with as little as 5% down on the first portion of the price, but with less than 20% down you must pay mortgage default insurance, which is added to your loan and raises what you owe.
The mortgage stress test. To qualify, lenders test you at a higher rate than your actual contract rate, which limits how much you can borrow. It is worth checking before you fall in love with a listing.
Land transfer tax. A significant closing cost in most provinces, sometimes with a rebate for first-time buyers. It is real money on day one and belongs in the buy column.

Confirm the current figures. Contribution limits, insurance rules, and provincial rebates change. Use the numbers here as a guide and verify the latest rules for your province before you commit.

Buying in the USA, briefly

The same math applies south of the border, with different labels. Instead of CMHC you have PMI (private mortgage insurance) below 20% down, mortgage interest and property tax may be deductible if you itemize, and closing costs replace land transfer tax. The calculator handles both countries.

Run your own numbers

The rent vs buy calculator projects your net worth on both paths year by year and tells you the break-even year for your exact rent, price, down payment, and assumptions. It is built for first-time buyers in Canada and the USA, and nothing you enter leaves your browser.

Find the year buying overtakes renting for your numbers.

Open the Rent vs Buy Calculator →

Frequently asked questions

Is renting really throwing money away?

No. Buyers also spend money that never builds equity, on interest, property tax, insurance, and upkeep. The fair comparison is the total cost of owning versus the total cost of renting plus the growth on the money a renter invests instead of tying it up in a home.

How long do I need to stay for buying to pay off?

Until you pass the break-even year, which depends on your price, rent, down payment, rates, and how fast prices grow. In many Canadian markets it lands somewhere in the mid-single-digit years, but the only reliable answer is to run your own numbers.

Should I use my FHSA before buying?

For most eligible first-time buyers it is very attractive: you get an RRSP-style deduction going in and a TFSA-style tax-free withdrawal coming out, up to $8,000 a year and $40,000 lifetime. Confirm you qualify and check the current rules before relying on it.