Compare Renting a home with Purchasing a home. The criteria above is used to calculate what the average annual increase in home value must be to reach a financial break even point - if you anticipate a lower % increase in home value, this means renting may be the better option. The rental alternative will allow you to save and invest both the downpayment of $ 25,000 and the monthly rental savings, initially at $ 26. At the end of the 36 month term your before tax investment will have grown to $ 26,508, assuming the savings rate of 0.75 % per annum. After paying annual income taxes at 0 % on the investment interest gain, the investment will have grown to $ 26,508. In order for the home purchase alternative with a mortgage interest rate of 4.75 % to perform as well as the rental option, the annual rate of property appreciation must be at least 0.49 % . Total property appreciation of 1.49 % together with principal repayment would result in homeowners equity of $ 31,582 in 36 months, less the 5 % cost to market the home of $ 5,074, for a net gain of $ 26,508. If the home value increased by more than $ 1,488 ( 1.49 % ) in 36 months, purchasing would be a better financial option than renting. RENT OWN Canadian Calculation - Compounding Semi-Annually Down Payment (25 %) $ 25,000 First Mortgage Amount (Includes Ins. Fee of $ 0) $ 75,000 TOTAL PRICE   $ 100,000   Monthly Costs Mortgage Payment $ 426 Property Taxes $ 0 Condo Fees $ 0 Other Costs $ 0 $ 0 Rent Payments ($ 400 Month 1 to $ 400 Last Month) $ 400 Total Monthly Payment   $ 400   $ 426 Monthly Cash Savings   $ 26     RENTAL cost always lower than Monthly OWNERSHIP cost in example. Future Value at Term ( 36 months) Down Payment Saved (@ 0.75 %) $ 25,569 Monthly Cash Savings (@ 0.75 %) $ 939 Taxes assumed to be paid annually (12th period) on interest.   Required Home Price at Term End $ 101,489 Less : Mortgage Balance ( $ 69,906 ) Less : Sales Commission (@ 5 %) ( $ 5,074 ) Equity at Term   $ 26,508   $ 26,508 Less Income Taxes on gain ( @ 0 % )   ( $ 0 )   $ 0 NET After Taxes   $ 26,508   $ 26,508   Required ANNUAL Home Price Increase Rate 0.49 % Required TOTAL Home Price Increase % (36 months) 1.49 % Required TOTAL Home Price Increase (36 months) $ 1,488   It is always difficult to forecast home price increases, but if the likely Annual Increase is higher than the above %, then buying a home would be the better option. If home prices do not rise by the above %, then renting would be a better option. Note that other factors with home ownership may impact the financial decision including the potential to borrow funds at lower rates if you own a home. Input a 0% commission rate if a sales commission is not payable. The savings rate is the percentage return on funds saved. The Mortgage Insurance Fee (Insur. Fee - ie. CMHC) is usually required for down payments less than 25%. Other factors to consider include heating costs - are they included in rent ? Home Insurance costs may also be factored in as another cost. Additionally, maintenance costs should be considered as part of home ownership and may be added to "other costs".