Homeownership can construct fairness and supply long-term housing stability, however elevated residence costs and borrowing prices put it out of attain for some. And whereas renting avoids the upfront value of shopping for and may protect extra cash for financial savings and investments, excessive rents could make it tougher to get forward financially.
There’s no common winner within the rent-versus-buy debate. The reply will depend on the complete value of shopping for, what you’ll be able to comfortably afford, what else you can do along with your cash and the way lengthy you anticipate to remain within the residence.
For Tina Tehranchian, a Senior Wealth Advisor at CI Assante Wealth Administration Ltd., that broader view is crucial.
“The target of the monetary plan shouldn’t be merely to seek out out in the event you can afford the home, but it surely needs to be to seek out out in the event you can afford the home and nonetheless obtain your different monetary targets,” she stated in an interview held for MoneySense.
The place to begin is affordability — not what a lender says you’ll be able to borrow, however what you’ll be able to comfortably carry.
Are you able to afford to purchase?
A mortgage pre-approval tells you the way a lot a lender is prepared to finance. It doesn’t essentially let you know how a lot residence you’ll be able to realistically afford.
“Approval is a ceiling, not a goal,” stated Canadian mortgage skilled Tracy Valko in an interview with MoneySense.
Lenders assess whether or not you’ll be able to service a mortgage based mostly in your earnings, money owed, and different monetary obligations. However they aren’t taking a look at your total family funds, they usually don’t know the way a lot you need to save for retirement or how a lot flexibility you want for all the things else in your life.
Contemplate figuring out affordability from the opposite course: begin with the housing fee you’ll be able to realistically carry whereas persevering with to save lots of and meet your different monetary commitments, then work backwards to find out what that helps when it comes to residence value.
Valko, Founding father of Valko Monetary Ltd. in Kitchener, Ont., suggests testing that quantity earlier than making a proposal.
For instance, in case your projected carrying prices can be $1,000 extra a month than your present lease, put that $1,000 right into a separate account for 3 months. If you are able to do that with out disrupting the remainder of your funds, you’ve acquired some proof that the upper value is manageable. If it hurts, you’ve discovered your restrict earlier than shopping for, quite than after.
Housing prices differ dramatically by market. Within the second quarter of 2026, the typical asking lease for a two-bedroom condominium was $3,030 a month in Vancouver, $2,650 in Toronto and $1,890 in Calgary, in keeping with Statistics Canada.
The quantity you’ll be able to comfortably spend additionally will depend on how a lot money you’ll have left after closing. A purchaser who places each out there greenback into the down fee might have a manageable mortgage however little monetary resilience when the primary main restore or sudden expense arrives.
“Lower than three months of cushion isn’t a cause to discover a extra inventive lender,” notes Valko. “It’s a cause to purchase much less home.”
What does shopping for really value?
The down fee is simply the start. Relying on the property and site, patrons may face land switch tax, authorized charges, title insurance coverage, an inspection, appraisal, apartment or strata doc charges, transferring prices and changes for bills the vendor has pay as you go.
The Monetary Shopper Company of Canada (FCAC) recommends budgeting 1.5% to 4% of the acquisition value for closing prices, though the precise quantity varies relying on the property and site.
