WealthRent vs Buy Calculator
Compare, over the horizon you choose, the projected net worth of buying a home versus renting an equivalent unit and investing the difference. Enter your numbers below — the result updates automatically.
How this calculation works
The monthly mortgage payment is computed with the standard amortization formula: M = P × r × (1+r)n / ((1+r)n − 1), where P is the amount borrowed (price minus down payment), r is the monthly interest rate, and n is the total number of payments over the amortization period.
For the "buy" scenario, the calculator grows the home's value at the chosen appreciation rate, reduces the mortgage balance month by month following real amortization (interest then principal), then subtracts an estimated 7% in selling costs (realtor commission and approximate transfer taxes) to arrive at the final net worth.
For the "rent + invest" scenario, the initial down payment is invested right away. Each month, if the total cost of owning (mortgage payment + property tax + maintenance) exceeds the rent, the difference is also invested at the expected return; if rent costs more than owning that month, no additional amount is added (the capital already invested keeps compounding).
Worked example
A $400,000 home, 20% down payment ($80,000), 5.5% rate over 25 years, 1.0%/yr property tax, 1.2%/yr maintenance, comparable rent of $1,800/month, 3%/yr appreciation, 6%/yr investment return, 10-year horizon.
Monthly mortgage payment: approximately $1,965. Since that payment plus taxes and maintenance exceeds the $1,800 rent, the renter invests the difference each month on top of the initial $80,000 down payment.
After 10 years in this example, the rent + invest scenario's net worth slightly exceeds the buying scenario's, mainly because the assumed investment return (6%) exceeds the assumed home appreciation (3%). Change the assumptions above to see how the result shifts based on your market and return expectations.
Important limitations of this model
This calculator is a simplified illustrative model. It does not account for, among other things, rent increases over time, mortgage rate changes at renewal, major renovations, tax benefits specific to your province, or the real (often non-linear) fluctuations of real estate and stock markets. Actual outcomes will depend on local market conditions at the time of your decision. This is not a recommendation to buy or rent — consult a real estate broker, notary, or fee-only financial planner for an analysis tailored to your situation.
Frequently asked questions
Does this calculator tell me whether I should buy or rent?
No. It illustrates a simplified net-worth scenario for each option based on the assumptions you enter. It is not personalized advice; your situation (job stability, time horizon, local market, risk tolerance) should be discussed with a qualified professional.
How is the monthly mortgage payment calculated?
Using the standard amortization formula M = P × r × (1+r)n / ((1+r)n − 1), where P is the amount borrowed, r is the monthly interest rate, and n is the total number of monthly payments over the chosen amortization period.
What does the calculator do with the monthly cost difference between renting and owning?
If the monthly cost of owning (mortgage + property tax + maintenance) exceeds the rent, the calculator assumes the renter invests that difference each month at your specified expected return. If rent costs more, no additional amount beyond the initial down payment is invested.
Are selling costs included in the calculation?
Yes, an estimated 7% of the home's value (realtor commission and approximate transfer taxes) is deducted from the buying scenario's net worth, to reflect the real cost if the home were sold at the end of the chosen period.
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