Monthly costs of owning vs renting a home
Understand the real monthly costs of renting and owning, from rent and utilities to mortgage payments, taxes, insurance, maintenance, condo fees, and equity.
Renting and owning both come with ongoing monthly costs. Understanding what each actually costs helps you make a more informed decision about which path makes sense for your situation.
Monthly Costs of Renting
Renting is often described as simpler to budget for, and in many ways it is. Your core monthly costs as a renter typically include:
- Monthly rent
- Tenant insurance (generally affordable)
- Utilities not included in rent
- Internet and other services
- Parking if not included
Beyond these, your financial exposure is limited. Major repairs, building maintenance, and property taxes are the landlord's responsibility.
Monthly Costs of Owning
Owning a home involves a wider range of ongoing costs:
- Mortgage payment (principal and interest)
- Property taxes (paid monthly through your mortgage or directly to the municipality)
- Home insurance
- Utilities
- Strata or condo fees if applicable
- Routine maintenance and repairs (a commonly used rule of thumb is to budget one percent of the home's value annually for maintenance)
- Mortgage default insurance premium if your down payment was less than 20% (added to your mortgage)
The Costs That Don't Show Up in a Monthly Comparison
A direct month-to-month comparison often underestimates the true cost of ownership. Closing costs, land transfer tax, legal fees, and the opportunity cost of your down payment (money that could otherwise be invested) are real costs that don't appear in a monthly payment.
On the other side, ownership builds equity over time and provides a hedge against rent increases. Renting offers flexibility and lower financial risk, particularly in markets where home prices are high relative to rents.
Which Costs More Month to Month?
In most major Canadian cities, owning a comparable property currently costs more per month than renting one, particularly when mortgage payments, property taxes, and maintenance are all factored in. In smaller cities and markets with lower home prices relative to rents, the gap narrows.
The right choice depends on your timeline, financial situation, and personal priorities rather than on a simple monthly cost comparison.