After years of renting, you may be wondering if you’re better off buying a home. The rent vs buy decision isn’t an easy one, but breaking it down to dollars and cents can give you a better picture of what home ownership would look like given your finances. To create this guide, we asked REMAX real estate experts for the most accurate and up-to-date information about what you can actually buy if you’re paying $1,800 in rent.
Key Takeaways
- At 4.5% interest with 20% down over 25 years, a total housing budget of $1,800/month supports a purchase price of roughly $330,000–$340,000 once all carrying costs are included.
- Total costs to buy vs rent include property taxes, insurance, maintenance, and potential condo fees, which all need to be factored into your monthly housing budget.
- A larger down payment is a good idea: it reduces your monthly mortgage payment and eliminates the need for CMHC mortgage default insurance.
- Buying isn’t always the better financial move. If you’re likely to move within a few years or need to keep cash on hand, renting may make more sense for you right now.
- A rent vs. buy calculator lets you explore different scenarios (down payment size, purchase price) so you can see exactly how each variable affects what you can afford.
How Much Are Mortgage Payments?
A good place to start the buying vs renting evaluation is to figure out whether your mortgage payments will be substantially higher than your rent. For this calculation, you need four inputs:
- The home’s purchase price
- Your down payment
- Your interest rate
- The amortization period
This table estimates mortgage payments for homes at a range of prices using an interest rate of 4.5%, a 20% downpayment, and a 25-year amortization.
| Purchase Price | Down Payment (20%) | Mortgage Amount | Est. Monthly Payment |
|---|---|---|---|
| $250,000 | $50,000 | $200,000 | ~$1,089 |
| $300,000 | $60,000 | $240,000 | ~$1,307 |
| $350,000 | $70,000 | $280,000 | ~$1,525 |
| $400,000 | $80,000 | $320,000 | ~$1,742 |
| $450,000 | $90,000 | $360,000 | ~$1,960 |
| $500,000 | $100,000 | $400,000 | ~$2,178 |
| $600,000 | $120,000 | $480,000 | ~$2,613 |
| $700,000 | $140,000 | $560,000 | ~$3,049 |
| $800,000 | $160,000 | $640,000 | ~$3,484 |
| $1,000,000 | $200,000 | $800,000 | ~$4,355 |
Note: Table is for illustrative purposes only. Actual mortgage payments will vary based on current interest rates, lender terms, mortgage type, and individual financial circumstances. Payments shown reflect principal and interest only and do not include property taxes, home insurance, condo fees, or maintenance costs. Discuss your personal situation with a licensed mortgage professional for advice.
The Full Rent vs Buy Comparison
Calculating mortgage payments is a good place to start comparing buying vs renting a home, but it’s not the whole story. To make a sound decision, add in the additional costs of home ownership. These include:
- Property taxes.
- Homeowners insurance.
- Condo fees or HOA fees, if applicable.
- Maintenance costs (ballpark 1% to 2% of the home’s cost annually).
- Utility payments (particularly relevant if utilities are included in your rent).
- CMHC insurance (if your down payment is less than 20%).
Using a rent vs buy calculator can help you figure out your total costs and also understand how each figure affects that total. Plug your numbers in and see which ones make the biggest difference for your situation. Try changing the figures to see where you can adjust your planning and expectations for the outcomes you want. For example, saving for a larger down payment will cut your monthly loan payments and save you the cost of CMHC insurance.
What You Can Buy With Your $1800 Budget
Switching from renting to buying on $1800/month is challenging but doable. Assuming:
- $1800/month is your total housing budget
- 20% down payment
- 5% interest rate and a 25-year amortization
- Property taxes of ~1% of your purchase price annually (this varies considerably by municipality; check for local rates)
- Home insurance of ~$150/month
- Maintenance costs of ~ $200/month
This leaves you with approximately $1,450 to $1,460 per month for the actual mortgage payment. That would put you in a home with a sale price of $330,000 to $340,000. In expensive markets like Toronto and Vancouver, you’d be stretched with that budget, but in affordable markets, you could purchase a cozy starter home or a modern condominium. While you’re still renting, explore the options!
What You Lose by Buying
Buying vs renting isn’t always the best decision. It’s important to consider what you lose when you decide to buy a home vs renting one.
Time and Energy
When you’re renting, all you have to do when something breaks is call the landlord. Owning a home means you have to do a lot of the work yourself, and that eats into your free time. Even seemingly simple tasks like mowing the lawn can take an entire afternoon, and when it comes to serious jobs like painting the exterior, you’re looking at a whole week when you would otherwise be on vacation. If you hire someone to do the work, you still need to vet the contractor and check up on the progress.
Mobility and Flexibility
If you decide to move from your rental, you just need to wait for your lease to expire. Then you can pick up and go to another apartment or another city. When you own a home, it’s not as easy to move. You may have to wait for a seller’s market for it to make financial sense. If circumstances require you to move quickly, you could end up having to sell at a loss.
Investment Potential
Buying a home means locking capital up in an investment that’s not liquid. Think of it like putting money in a term deposit that’s expensive to cash in and will only pay a good return if you leave your funds in it for years or even decades. If you rent vs buying, you can use that money for an investment that gives you a quicker and potentially larger return.
What You Lose by Renting
Renting vs buying also has costs:
No Return on Investment
Since the money you pay in rent never comes back to you, you make no return on it at all. When you buy vs rent, you’re putting your money into a long-term investment that, historically, has paid a good return.
Less Control
Renting means you can call your landlord to fix any problems you have, but you have no control over how they fix it and what materials they use. You also can’t make structural changes to your space, and in many buildings, you can’t even paint the walls to suit your tastes.
Risk of Eviction
With a rental, there’s always a chance your landlord will evict you. This could leave you scrambling for a place to live when rents in your area have risen. You’ll also incur moving costs, even if you do most of the move yourself.
Running Your Own Numbers
If you’re making a rent vs buy decision, run the numbers using a rent vs buy calculator, which you can find online. Game out different scenarios to figure out what you can afford, where and how you can change the overall picture. For example, you might consider moving to a different part of the country, or even just outside your current area. You could save more for a down payment, which would reduce your mortgage payments, and you could improve your credit score for an easier time qualifying. Alternatively, you could decide that renting is the right option for you right now. There’s no one correct choice: just the one that’s right for you.
Frequently Asked Questions
Is $1,800/month enough to buy a home in Canada?
It depends on your market and how much you have saved for a down payment. Using $1,800 as your total monthly housing budget, you could afford a home priced around $330,000 to $340,000 with 20% down at current rates. In more affordable markets, you’ll have a range of options in starter homes and condos.
What costs should I add to my mortgage payment when comparing renting vs. buying?
Beyond the mortgage itself, budget for property taxes (roughly 1% of the purchase price annually, though this varies by municipality), home insurance (approximately $150/month for a typical home), and maintenance (1–2% of the home’s value per year). If you’re buying a home in a condo or strata community, add those monthly fees as well, but subtract some of the maintenance. If your rent currently covers utilities, factor those in too.
What is CMHC insurance, and do I have to pay it?
CMHC mortgage default insurance is required by Canadian lenders when your down payment is less than 20% of the purchase price. The premium ranges from 2.8% to 4% of the mortgage amount and is typically added to your loan balance. Putting down 20% or more eliminates this cost entirely.
Is buying always better than renting in the long run?
Not necessarily. Buying builds equity over time and historically has delivered solid long-term returns, but it also ties up your money, limits your mobility, and comes with ongoing costs that you don’t have when you rent. If you plan to move within two to three years, the transaction costs of buying and selling can outweigh the equity you build by owning. The right answer depends on your financial situation, your timeline, and your local market.
How can I figure out what I can actually afford?
Start with a rent vs. buy calculator to look at different purchase prices, down payments, and interest rates. Then add your estimated carrying costs to get a realistic total monthly figure. A real estate agent can give you details of what’s available in your price range, and a licensed mortgage professional can help you with the financial side.
