Should Your First Home Be a Rental or a Purchase?

For a first-time buyer, the very first question isn't which house to buy — it's whether to buy at all yet, or keep renting. Both are valid. Renting offers flexibility and lower up-front cost; buying builds equity and locks in your housing. Here's how to weigh the two for your first home.

Key takeaways

• Renting is cheaper to start and more flexible; buying builds long-term equity.
• Buying carries up-front costs: a down payment plus 1.5%–4% in closing costs.
• How long you'll stay is the single biggest factor in the rent-vs-buy math.
• Ontario's 2026 rent increase guideline is 2.1% for most older units.
• HOMEH's Cashback Rebate, the industry's highest, can tip the math in favour of buying.

What renting really costs

Renting has a low barrier to entry — usually first and last month's rent — and gives you flexibility to move. The trade-off is that rent builds your landlord's equity, not yours. In Ontario, for most units first occupied on or before November 15, 2018, the 2026 rent increase guideline is 2.1%, with increases allowed once every 12 months on 90 days' notice. Newer units are exempt from the guideline. See how much a landlord can raise rent.

What buying really costs

Buying requires more up front: a down payment (minimum 5% under $500,000) plus closing costs of 1.5% to 4% of the price. But your monthly payment builds equity, and your principal-and-interest portion is fixed for your term. Over time, that equity is the core argument for buying. Run the full numbers with the rent vs buy calculator.

Equity is the difference

Rent is gone each month. A mortgage payment splits between interest and principal — and the principal portion is yours, building equity you keep when you eventually sell.

The factor that decides it: how long you'll stay

The longer you stay in a home, the more buying tends to win, because you spread those one-time closing costs over more years and build more equity. Over a short horizon, renting often comes out ahead.

Getting ready to buy

If buying wins for you, the next steps are saving and getting financed. Start with how much to save before buying, then read the full first-time home buyer guide for Ontario.

How HOMEH changes the math

Buying looks better when your costs are lower. Eligible HOMEH buyers receive the industry's highest Cashback Rebate, which can offset closing costs and shorten the payback period versus renting. Compare your own numbers with the rent vs buy calculator.

Cashback tilts the scale toward owning

Eligible HOMEH buyers get the industry's highest Cashback Rebate. Estimate yours with the cashback calculator.