Rent vs. Buy?

Considering whether you should keep renting? Is now the time to buy? Ever wondered what your rent payment would be as a mortgage amount? Complete the below calculator and find out what your rent payment would equal in terms of a mortgage amount…

Use Our Rent vs. Buy Calculator To Find Out if You Should Rent or Buy a Home

Here at Sterling Homes, we understand that one of the biggest financial decisions you'll make in your life is whether to rent or buy a home. But the idea of a monthly mortgage payment can seem daunting. That's why we've created this rent vs. buy calculator to help you figure out which option makes the most sense for you.

Using the rent vs. buy calculator is simple. Just enter the following information:

• The value of the home you want to buy
• The interest rate on your mortgage
• The number of years you plan on staying in your home and
• Your monthly rent

The calculator will then show you a comparison of the total cost of renting vs. buying a home over the course of those years, and tell you how quickly you'll start saving money if you decide to buy your home.

Buy Gain

Cost: After years, your total cost of homeownership (down payment, mortgage, taxes, etc.) for a home in Canada would be . Your total cost to rent would be . Renting leaves you with in your pocket (including the money you didn't spend on a down payment).

Gain: After years, if you buy, your home will have in equity (available to you when you sell). However, if you instead rent and invest your down payment and the other money you save, at a % return rate it will earn around in years.



Below are other factors we've taken into consideration. They're pre-filled with the averages for your location and can be adjusted to match your situation.

First-year home value forecast


Buying Expenses


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Please enter a valid purchase costs rate.


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Rental Expenses


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Are You A Realtor® And Want To Utilize This Rent Vs Buy Calculator On Your Website?

Our calculator was designed to help customers as well as real estate agents; to help figure out whether it makes more financial sense to buy or rent a home. The calculator takes into account factors like the down payment, mortgage interest rate, property taxes, and other costs associated with ownership. It also considers the costs associated with renting, such as utility costs, rent broker fees, renters insurance and a deposit. Based on this information, the calculator provides an estimate of the total cost of renting vs. buying a home and is a valuable resource; one that is both comprehensive and unbiased.

If you're a Realtor® in Canada and want to add this rent vs. buy calculator to your website, simply copy and paste the following HTML Snippet to embed this tool on your website:

By adding this rent vs. buy calculator to your website, you'll be able to help your clients make an informed decision about whether renting or buying is right for them.

Is It Better To Rent or Buy A Home?

When it comes to your finances, the main difference between renting and buying a home is that when you rent, you’re paying someone else’s mortgage while when you buy, you’re paying your own. In other words, with rent, you’re spending money each month that could be going towards building equity in your own home.

Rent Vs. Buy: The 5% Rule

The general rule of thumb when deciding whether to rent or buy is known as the 5% rule. This compares renting vs. buying by estimating three extra costs which buyers have to pay and renters don’t.

These costs are:

  • The cost of capital, which is generally around 3% of the value of the home. This is determined by comparing the average annual return on a real estate investment against the opportunity cost of investing elsewhere. It gets a little complicated and can vary depending on the economy, but 3% is a safe general rule.
  • Maintenance costs, which are around 1% of the value of the home.
  • Property taxes, also around 1% of the home’s value. 

Altogether, these will add up to about 5%. To use this formula, you just need to divide 5% of the value of your home by 12 to get the monthly breakeven point.

As an example:

Home Value: $300,000

Divide by 5%: $15,000

Divide by 12: $1,250

In this scenario, if you can rent a comparable home for less than $1,250 per month then you may be better off renting, at least in the short term. This rule is fairly simplified and doesn’t account for some of the longer-term benefits of buying a home, but it can be useful as a general rule of thumb.

There are other factors you should consider, too. Let’s look at the pros and cons of renting versus buying a home.

Renting Versus Buying A Home: Pros And Cons

Deciding whether to rent or buy your next home isn’t always an easy decision. Here’s a quick rundown of some of the key things you should consider:

The Pros of Renting

Renting is a popular option,  particularly for people who are new to the city or are not yet ready to commit to purchasing a home. Renting can allow for more flexibility than owning, and is often less expensive in the short term.

Here are a few pros to consider when thinking about renting:

You Don’t Need To Come Up With A Down Payment

A common obstacle for many people when trying to purchase a home is coming up with the required down payment, which can be up to 20% of the total cost of the home. When you rent, you don’t need to worry about this expense.

Less Commitment

If you rent, you can usually sign a one- or two-year lease and then have the option to renew or move. This flexibility can be great for people who are not yet ready to commit to living in one place for an extended period of time. In contrast, when you purchase a home you are generally committed to staying there for several years.

More Availability

Sometimes, it’s easier to find a rental property in your community of choice, especially if it’s an older or more established community with fewer new homes for sale. If the rental market in your city is good, you’ll have plenty of options to choose from. However, you may have to sacrifice your preferred home style in favour of a convenient neighbourhood.

You’ll Be Unaffected By Mortgage Rates

One of the main concerns with monthly mortgage payments is that they can change unexpectedly, particularly if you have a variable-rate mortgage.  If mortgage rates go up, your monthly payments will rise along with them, which can cause financial hardship. When you rent, your rent payments are generally fixed for the term of your lease, so you won’t have to worry about this type of fluctuation, at least until your lease renewal.

You Don’t Have To Pay Homeowners Insurance

Another expense you can avoid by renting is Homeowners Insurance. While you still have to pay for Renters Insurance (which is optional but HIGHLY recommended!), this is generally much less expensive than Homeowners Insurance.

You Don’t Need To Worry About Maintenance And Repairs

When you rent, your landlord is responsible for maintaining and repairing the property. This can be a huge relief if something breaks or needs to be fixed, as you won’t have to foot the bill yourself.

The Cons Of Renting

Of course, there are also some downsides to renting that you should consider before making your decision, such as: 

Limited Personalization

In most cases, you won’t be able to make any major changes or renovations to a rental property. For instance, if you want to paint the walls or change the flooring, you’ll need permission from your landlord and may have to pay for the work you want to do.

You’re Not Building Equity

When you make rent payments, that money goes to your landlord and is gone forever. In contrast, every mortgage payment you make goes towards building equity in your home, which you can eventually cash in when you sell.

You Might Have To Move Unexpectedly

If your landlord decides to sell the property or needs to move in themselves, you may have to find a new place to live on short notice. While a good landlord will give you plenty of time to find a new place, this can still be disruptive and stressful.

Rent Increases Can Be Difficult To Deal With

While rent prices generally don’t increase as quickly as home prices, they can still go up over time. If your rent is raised significantly, it can be difficult to afford your monthly payments.

You’ll Miss Out On Increasing Property Value

If you rent, you won’t be able to benefit from any increase in the value of the property. However, if you own a home and the market value goes up, you may be able to sell it for more than you paid and pocket the difference.

The Pros Of Buying

Buying a house is the best way to gain financial security from your home.  It offers many other advantages, such as:

Building Equity

One of the main advantages of owning a home is that you’ll build equity over time. As you make mortgage payments, you’ll slowly but surely own more and more of your home until you eventually own it outright. Once the mortgage is fully paid and you own it completely, you can use the equity to make other large purchases like a car or even a second home.

There are also a number of financial incentives available if you’re a first-time buyer. The First-Time Home Buyers’ Tax Credit (which we discussed in our Down Payment Basics for First Time Buyers article) provides money back to first-time homebuyers on their first house purchase.

Tax Benefits

Another advantage of owning a home is the potential tax benefits. If you own a home you may be able to deduct mortgage interest and/or property taxes on your income tax return. This can save you quite a bit of money every year.

More Control Over Your Payments

When you rent, your rent payments can go up at any time and there’s nothing you can do about it. In contrast, if you have a fixed-rate mortgage, your payments will be the same for the entire term of the loan, regardless of what happens to interest rates. This makes budgeting much easier and gives you more stability.

You can also choose your payment frequency.  If you rent, you’re generally stuck paying monthly. However, if you own a home, you can choose to make bi-weekly or even weekly payments if it suits you better. This also means you’ll pay less mortgage interest in the long run.

You Control Your Space

When you rent, your landlord controls the property.  This means they can come in and inspect it whenever they want and make any changes or renovations they see fit. However, when you own a home, you have complete control over what happens to it.  You can paint the walls, put up new shelving, or renovate any part of it to suit your needs and taste.

Of course, if you live in a condo or townhouse, there may be some restrictions on what you can do to the property, but you’ll still have more control than if you were renting.

You Can Become a Landlord

Renting a room or purchasing a house with a basement suite can help you generate additional money. In certain situations, renting out a space in your home could completely pay for your mortgage!

The Cons Of Buying

While there are many advantages to owning a home, there are also some potential disadvantages you should be aware of:

Saving for a Down Payment Can Be Difficult

One of the biggest obstacles to buying a home is coming up with a down payment. In Canada, you’ll generally need to put down at least 5% of the purchase price, and in some cases as much as 20%.  This can be difficult to do if you don’t have a lot of money saved up.

More Paperwork Involved When Buying

Another potential disadvantage of buying a home is the amount of paperwork involved. The mortgage application process can be long and complicated, and you’ll also need to deal with things like home insurance and property taxes.

Other Additional Costs

When buying a home, you should be aware of other potential fees, such as opening and closing costs, taxes, and Homeowners Insurance.

You’ll also have to consider the opportunity cost of your investment. For example, you may want to keep a larger emergency fund on hand in case something goes wrong, or in the event of a significant change in your employment status. The investment in a new home is worthwhile overall; just be prepared to factor in these costs.

Less Mobility

When you own a home, you’re generally stuck in one place for a while. This can make it difficult to move if you need. Of course, you can always rent out your home or use it as an Airbnb if you do need to move, but this isn’t always easy to do.

You’re Locked In For The Term Of The Mortgage

Once you take on a mortgage, it’s a big commitment. If you’re not planning on staying in your home for the full term of the mortgage, you may be stuck paying a hefty penalty to break it early. It’s best to consider your future plans carefully before taking on a mortgage.

You Need to Maintain the Property

When you rent, it’s up to your landlord to keep the property in good working order. However, when you own a home, it’s up to you to make sure everything is maintained. This can be expensive and time-consuming, especially if something major needs to be repaired. You can reduce the risk of this by buying a brand-new home instead of a resale,  but it’s still something to be aware of.

What Are Other Expenses For Homeowners?

There are a number of other expenses that you’ll need to factor in when budgeting for your monthly mortgage payments. These include:

  • Property tax
  • Homeowners Insurance
  • Mortgage default insurance (if you’ve paid less than 20% for a down payment)
  • Maintenance and repairs
  • Utilities

If you’re currently renting, some of these expenses may be included in your rent. For example, your landlord may cover the cost of water and heat or some other utilities.

When you own a home, you’re responsible for paying all of these expenses yourself. It’s important to factor in all of these costs when you’re budgeting for your monthly mortgage payments.

The Benefits of Building Equity

When you buy a home, you’re not just buying a place to live — you’re investing in your future. By building equity in your home, you’re creating a valuable asset that can help you secure your financial future.

Here are some of the benefits of building equity in your home:

Your Home Can Supplement Your Retirement Fund

As your home equity grows, it can become an important part of your retirement savings plan. You can use it to help finance your retirement years or to supplement other retirement income sources.

You Can Use Your Home Equity To Get A Low-Interest Loan

If you need a loan for a big purchase or renovation, you may be able to borrow against the equity in your home at a lower interest rate than you could with other types of loans. This can save you money on interest payments and help you get ahead financially.

Equity Can Give You Peace Of Mind

Your home is one of your biggest investments, and building equity in it provides peace of mind and security for the future. If something happens and you have to sell your home, you’ll have more money to work with if its value has increased since you bought it.


Click to download How to Buy a House: What You Need to Know now

Considering Buying a Home?

If you have any questions, whether it’s about this rent vs. buy calculator, any of our new build or quick possession models, or if you have any questions about the new home buying process, feel free to contact any of our Area Managers. We’re here to help!

Sterling Homes offers a wide selection of new homes for sale in Edmonton, including duplexes, townhomes and single-family homes. If you’re thinking of buying a home, we can help you find the perfect one to suit your needs.

Check out our full list of home models to see what we have to offer, or if you need to buy a new home more quickly, take a look at our range of Quick Possession Homes.

We have a wide range of floor plans to choose from, so you’re sure to find something that’s perfect for your lifestyle. And, if you need help finding the right mortgage, our on-site Mortgage Specialists would be happy to assist you.

Your monthly mortgage payment is made up of several different components, including the mortgage principal, interest, taxes and homeowners insurance. The mortgage principal is the amount you've borrowed from your lender, which will gradually decrease as you pay off your home. The interest is the fee that you're charged for borrowing the money and it's typically a percentage of the mortgage principal. Taxes and homeowners insurance are two additional costs that are usually rolled into your monthly mortgage payment. These taxes are set by your municipality and they're based on the value of your home. Homeowners insurance is a type of insurance that protects you from damages to your home or possessions and it's typically required by your lender. To calculate your monthly mortgage payment, you'll need to know the mortgage principal, interest rate, term and amortization period. If you've paid less than 20% for a down payment, you'll also need to factor in mortgage default insurance, which is insurance that protects your lender in case you can't make your payments. Once you have all of this information, you can use a mortgage payment calculator to determine how much your monthly payment is likely to be.
As an example: assuming you’re buying a $500,000 home and have put down 20% for a down payment, with a 25-year amortization period and a 4.5% interest rate (a fairly typical rate at the time of writing), your monthly mortgage payments would be around $2,223. Of course, this is just an estimate and your actual monthly payment will depend on a number of factors, including the interest rate, term and amortization period and what type of mortgage you have. When you're ready to buy a home, it's important to speak with a mortgage broker or financial advisor to get an accurate idea of what your monthly payments will be.
There's no easy answer to this question as it depends on a number of factors, including your income, debts and other financial obligations. However, a good rule of thumb is to keep your mortgage payments to no more than 32% of your gross monthly income. This includes not just the principal and interest, but also any taxes, homeowners insurance and, if you've paid less than 20% for a down payment, mortgage default insurance. Of course, this is just a general guideline and you'll need to speak with a mortgage broker or financial advisor to get an accurate idea of how much you can afford to spend on your mortgage.
Property taxes in Canada are set by your municipality and they're based on the value of your home. The amount of tax you'll pay each year will affect your monthly mortgage payments. To calculate how much tax you'll need to pay, you'll need to know the taxable value of your home and your municipality's tax rate. The way to calculate this is: your property assessed value x municipal tax rate = your municipal property taxes So for example, in Edmonton, if the assessed value of your home is $350,000 and the municipal tax rate is 0.0069072% (the value as of 2022), then 350000 x 0.0069072 = $2,417.52 in annual taxes. This means that your monthly mortgage payments will be increased by $201.46 to cover this cost. It's important to factor in the cost of property tax when you're budgeting for your monthly mortgage payments.
The amortization period is the length of time it will take you to pay off your mortgage. The most common amortization periods in Canada are 25 years and 30 years. Your monthly mortgage payments will be lower if you have a longer amortization period, but you'll end up paying more interest over the life of your mortgage. As in the above example, if you have a $500,000 mortgage with a 4.5% interest rate and a 25-year amortization period, your monthly mortgage payments will be approximately $2,223. If you have the same mortgage but with a 30-year amortization period, your monthly mortgage payments will be approximately $2,027. While your monthly payments will be lower with a 30-year amortization period, you'll end up paying just over $60,000 more in interest over the life of your mortgage.

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