Rent vs Buy in Canada: The 2026 Math on an $800,000 Home
The usual way to settle rent vs buy in Canada is to set the monthly mortgage payment beside the monthly rent and declare the smaller number the winner. That comparison is broken, because a mortgage payment is two different things wearing one number. Part of it is interest, which is gone the moment it leaves your account. Part of it is principal, which moves from one pocket to another and is still yours. Comparing the whole payment to rent compares a cost to a cost plus a savings plan.
The comparison that actually answers the question is unrecoverable cost against unrecoverable cost. For an owner, the money that never comes back is mortgage interest, property tax, maintenance and home insurance, plus the transaction costs of getting in and getting out. For a renter, it is rent and tenant insurance. Everything else on the owner’s side is a transfer into home equity, and everything the renter does not spend is available to invest.
Run the numbers that way and neither side wins automatically. Below is a worked example at three mortgage rates, followed by the four variables that decide the outcome and that no calculator can settle for you.
Where the rate math starts
The Bank of Canada’s posted conventional 5-year mortgage rate was 6.09% as of September 16, 2026, published in the Bank of Canada daily digest. That is the posted rate, not the rate most buyers sign. Negotiated contract rates run lower, which is why the example below tests contract rates beneath it rather than at it.
There is also a qualifying hurdle that sits above whatever rate you sign. OSFI sets the minimum qualifying rate for uninsured mortgages at the greater of the contract rate plus two percentage points or 5.25%. The qualifying row in the table applies that same contract-plus-two arithmetic, which is why a 4.0% contract rate is tested at 6.0%. Qualifying for a mortgage and comfortably carrying one are separate questions, and we worked through the qualifying side, including down payment minimums, in our guide to how much mortgage you can afford.
One more input before the table. A down payment under 20% means mortgage default insurance. At a loan-to-value ratio between 85.01% and 90%, the premium is 3.10% of the loan according to CMHC’s mortgage loan insurance cost page. That premium is normally added to the mortgage, so it is borrowed and it accrues interest for as long as the loan runs.
The assumptions behind the example
These are illustrative assumptions, not forecasts and not data. Change any one of them and the answer changes.
- Purchase price $800,000, with 10% down ($80,000) and a 25-year amortization.
- Property tax $450 per month, maintenance $500 per month, home insurance $150 per month.
- Rent on a comparable home $2,600 per month, plus $30 per month for tenant insurance.
- The renter invests the monthly difference in outlay at 5% per year. This is a modelling assumption, not an expected return.
From those inputs: the base loan is $720,000, the CMHC premium at 3.10% adds $22,320, and the mortgage therefore starts at $742,320.
The worked example, at three contract rates
| Contract rate | 4.0% | 4.5% | 5.0% |
|---|---|---|---|
| Stress-test qualifying rate | 6.0% | 6.5% | 7.0% |
| Monthly payment | $3,904.75 | $4,108.54 | $4,317.37 |
| Year-1 interest per month | $2,427 | $2,730 | $3,032 |
| Owner unrecoverable cost/mo (interest+tax+maint+ins) | $3,527 | $3,830 | $4,132 |
| Owner total outlay/mo | $5,005 | $5,209 | $5,417 |
| Renter outlay/mo | $2,630 | $2,630 | $2,630 |
| Difference the renter can invest/mo | $2,375 | $2,579 | $2,787 |
| 5-yr interest paid | $138,184 | $155,923 | $173,731 |
| 5-yr principal paid (equity built) | $96,101 | $90,590 | $85,311 |
| 5-yr renter portfolio at 5% on the difference | $161,041 | $174,860 | $189,022 |
| Breakeven rent/mo | $3,497 | $3,800 | $4,102 |
The row that does the most work is the last one. Breakeven rent is the rent at which the renter’s unrecoverable cost equals the owner’s. Below it, renting costs less in pure cash terms. Above it, buying does, before any house price appreciation is counted at all.
At a 4.0% contract rate, that line sits at $3,497 per month against assumed rent of $2,600. The renter is ahead on cash by a wide margin, and the gap widens as rates rise: $3,800 at 4.5% and $4,102 at 5.0%. Higher rates hurt the owner twice: the payment rises, and a larger share of it becomes unrecoverable interest, which pushes the breakeven rent further away from what a comparable place actually rents for.
Look at the two five-year balances side by side and the picture gets more honest in both directions. At 4.0%, the owner has converted $96,101 of payments into equity while paying $138,184 in interest. The renter, on the same assumptions, ends the five years with a portfolio of $161,041. Both of those numbers represent money the household directed into an asset rather than spent, and neither is a return on its own.
The four things that decide it
House price appreciation, which is leveraged. The table contains no appreciation at all. Add it and the owner’s side improves fast, because a 10% down payment means a 10% rise in the price roughly doubles the buyer’s equity. The gain on a designated principal residence is also generally tax-free, per the CRA’s principal residence guidance. Leverage is symmetric, though. A price fall is amplified by exactly the same mechanism, and nothing about the arithmetic promises which direction prices go.
Rent growth. The renter’s side of the table is fixed for illustration, and real rent is not. In Statistics Canada’s August Consumer Price Index release, published September 14, 2026, rent was up 2.8% year over year nationally, accelerating from 2.5% in July. The national figure hides a wide spread: Ontario at 2.4%, Manitoba at 4.3%. Shelter costs overall rose 1.5% year over year. A renter also never stops paying, while an owner who discharges the mortgage has capped the housing line in retirement. A renter needs a larger portfolio to fund rent for life.
Your rate at renewal. The example holds a single contract rate for five years, which is what a five-year term does. It does not tell you what the next term costs. Move one column to the right in the table and you can see what a higher renewal rate does to the interest line without changing anything else.
Whether the difference is actually invested. This is the assumption most likely to fail in real life. The renter’s portfolio column exists only if $2,375 or more leaves the chequing account every month and goes into investments. Spent, it simply vanishes and the comparison collapses. The owner’s principal, by contrast, is forced saving: it happens whether or not anyone feels disciplined that month. The difference also compounds far better inside a shelter than outside one, which is the whole point of a TFSA.
What the table leaves out
Transaction costs. Ontario charges land transfer tax on the way in, $12,475 on an $800,000 purchase, falling to $8,475 for a first-time buyer after the maximum $4,000 refund, figures we set out in full in our land transfer tax breakdown. Selling costs apply on the way out. We are not putting a number on those here, but the direction is clear: the shorter the holding period, the more those entry and exit costs weigh against buying.
Property tax is also more variable than a single monthly assumption suggests, and it is not calculated on the price you paid. Toronto’s total 2026 residential rate is 0.767311% applied to MPAC assessed value, per the City of Toronto property tax rates page. Assessed value and market price are different numbers, and rates differ by municipality, so the only property tax figure worth planning around is your own.
The honest conclusion
Rent versus buy is not a question with a national answer, and the table above is not a verdict. On the stated assumptions, the renter sits well below breakeven rent at every rate tested, and the renter’s five-year portfolio exceeds the owner’s equity. Neither of those results survives contact with meaningful house price appreciation, a rent increase, or a month where the difference gets spent instead of invested.
What the unrecoverable-cost framing does give you is a fair scoreboard. Work out your own interest, property tax, maintenance and insurance, set it against rent plus tenant insurance on a comparable place, and you will at least be comparing like with like. Then judge the four variables above honestly, including the one about your own saving habits, because that is where the answer actually lives.
Data as of: Bank of Canada posted 5-year rate September 16, 2026. CPI figures are for August 2026, released September 14, 2026. All worked-example figures are illustrative and derive from the stated assumptions.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions.
