The rent vs. buy decision is more nuanced than ever in 2026. With home prices, interest rates, and rent all having shifted significantly, the math looks different than it did a few years ago. Let's break it down.
The Core Question
Buying isn't always better than renting—and renting isn't just "throwing money away." The right choice depends on:
- How long you'll stay
- Local price-to-rent ratios
- Your financial situation
- Lifestyle priorities
- Investment alternatives
Run Your Numbers
Get pre-approved to understand exactly what you can afford, then compare to rental costs in your area.
The True Cost of Owning
Monthly Costs Comparison
$600,000 home with 10% down, 5% rate:
| Cost | Monthly Amount | ------ | --------------- | Mortgage payment | $3,145 | Property tax | $500 | Insurance | $150 | Maintenance (1% of value/year) | $500 | Total ownership costs | $4,295 | Renting equivalent unit: | Cost | Monthly Amount | ------ | --------------- | Rent | $2,800 | Tenant insurance | $30 | Total rental costs | $2,830 | Monthly difference: $1,465 more to own
But What About Equity?Ownership Equity BuildingYear 1 breakdown of $3,145 mortgage payment: |
Portion | Amount | Percentage | --------- | -------- | ------------ | Interest | $2,250 | 72% | Principal | $895 | 28% | Key insight: Early in your mortgage, most payments go to interest, not equity.
The "Rent Is Throwing Away Money" Myth |
Ownership "Thrown Away" | Rental "Thrown Away" | ------------------------ | --------------------- | Mortgage interest | Rent | Property tax | — | Insurance | Tenant insurance | Maintenance | — | Transaction costs (prorated) | — | Owners also "throw away" significant money on non-equity expenses.
The Investment AlternativeWhat if you rent and invest the difference? 5-Year Scenario ComparisonAssumptions:
|
Metric | Buy Scenario | Rent + Invest | -------- | -------------- | --------------- | Starting equity | $60,000 (down payment) | $0 | Monthly "extra" cost | $0 | -$1,465 (invested) | 5-year investment growth | — | $102,000 | Home appreciation (5 years) | $96,000 | — | Principal paid (5 years) | $62,000 | — | Total wealth gain | $158,000 | $102,000 | In this scenario: Buying wins by ~$56,000 over 5 years.
But it depends heavily on:
The Break-Even TimelineHow Long Until Buying Wins?Transaction costs make buying expensive for short stays: |
Cost Type | Typical Amount | ----------- | -------------- | Buying costs | 2-4% of purchase | Selling costs | 5-6% of sale price | Total transaction costs | 7-10% | Rule of thumb: You typically need to stay 3-5 years for buying to beat renting financially. | Years in Home | Buying Likely Wins? | --------------- | -------------------- | 1-2 years | Usually no | 3-4 years | Maybe | 5+ years | Usually yes | 10+ years | Almost always |
Market-Specific FactorsThe Price-to-Rent RatioFormula: Home price ÷ Annual rent |
Ratio | Interpretation | ------- | ---------------- | Under 15 | Buying is attractive | 15-20 | Neutral—either can make sense | Over 20 | Renting may be better | 2026 Examples (approximate): | City | Typical Ratio | Indication | ------ | --------------- | ------------ | Calgary | 16-18 | Neutral to buy-friendly | Montreal | 18-22 | Neutral | Toronto | 25-30+ | Rent-friendly | Vancouver | 28-35+ | Rent-friendly |
Non-Financial FactorsReasons to Buy (Beyond Money)
Reasons to Rent (Beyond Money)
Decision FrameworkStrong Buy Signals
Strong Rent Signals
Common MistakesBuying Mistakes |
Mistake | Consequence | --------- | ------------- | Buying for short stay | Transaction costs eat equity | Stretching budget too far | House poor, no savings | Ignoring maintenance costs | Budget blown by repairs | Comparing mortgage to rent | Missing ownership costs |
Renting Mistakes |
Mistake | Consequence |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Not investing the difference | Miss wealth building | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lifestyle inflation | No down payment growth | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Renting forever in buy-friendly market | Miss appreciation | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ignoring rent increases | Budgets blown over time |
FAQ
Q: Is renting really "throwing away money"?
A: No—you're paying for shelter, flexibility, and freedom from ownership costs. Owners "throw away" money on interest, taxes, and maintenance too.
Q: Should I wait for prices to drop?
A: Timing markets is extremely difficult. Focus on your personal timeline and affordability rather than market predictions.
Q: What if I can barely afford to buy?
A: If buying means zero savings buffer and constant financial stress, renting and building savings may be smarter.
Q: Is it different for condos vs. houses?
A: Yes—condos have additional fees and risks (special assessments). Factor condo fees into ownership costs.
Q: What about the emotional benefits of owning?
A: Real and valid. If ownership provides significant happiness and stability, that has value beyond the math.
What's Next
Ready to explore buying? Get pre-approved to understand exactly what you qualify for, then compare to rental costs in your target areas.
Explore Your Options
Get pre-approved to understand what you can afford, then compare to rental alternatives.
