Rent or Buy a Home in Canada: What’s Better for Newcomers?

Many newcomers to Canada eventually face a big question: should you keep renting, or is it time to buy your first home? Deciding whether to rent versus buy a home in Canada is a personal choice that depends on your finances, lifestyle, and long-term goals. Both options have pros and cons, and understanding them is the first step to making a smart housing decision. If you decide homeownership is the path for you, learn how to get pre-approved for a mortgage so you know how much you can afford.

According to Statistics Canada, approximately two-thirds of Canadians (66%) own their homes, reflecting the high value people place on homeownership, even as affordability challenges persist.

Is Renting Right for You as a Newcomer?

PROS OF RENTING	CONS OF RENTING
Flexibility: Easier to move if your job or personal circumstances change. Ideal for short-term or uncertain plans.	No equity growth: Rent payments do not contribute to wealth or property ownership.
Lower upfront costs: No down payment or major repairs required.	Lease restrictions: The terms of the lease may limit certain activities, and you must comply with all rules set by the landlord.
Access to premium areas: Rent in neighbourhoods where buying may be unaffordable.	Limited control over the property: You usually cannot renovate, paint, or make changes without approval from your landlord.
Lower additional costs: Insurance is only for contents, not the building.	Lease uncertainty: Landlords do not have to renew your lease, so you may need to move when your lease expires.

As of 2025, the average rent for a one-bedroom apartment in Canada is about $2,000 per month, with prices higher in cities like Toronto and Vancouver.

Is Buying a Home the Better Choice?

According to recent surveys, approximately 75% of newcomers aim to buy a home within 3 – 5 years of arriving in Canada. However, you need to weigh the pros and cons before rushing into a decision.

PROS OF BUYING A HOME	CONS OF BUYING
Equity and wealth creation: Monthly mortgage payments build ownership in your property.	High upfront costs: down payment, closing costs, and home inspections.
Security and stability: Owning your home gives long-term control over your living space.	Financial responsibility: Mortgage repayments, taxes, insurance, and maintenance are ongoing obligations.
Potential appreciation: Homes can increase in value over time, creating profit when sold.	Reduced mobility: Selling a home can take a long time compared to ending a lease.
Freedom to customize: Renovate, decorate, and improve your house as you wish.	Market risk: Home value may fluctuate due to interest rates or economic conditions.
Credit benefits: Timely mortgage payments improve your Canadian credit profile.

The Canadian Real Estate Association reports the average home price in Canada was approximately $750,000 in 2025, highlighting the importance of budgeting carefully before buying.

Newcomer Story: Why Anna Chose to Buy

Anna Prokofieva, a former newcomer from Ukraine, explains:

“I decided to buy because paying for equity is better than paying rent. Renting gave me flexibility, but I wanted freedom and long-term security. I carefully evaluated my finances, future needs, location, and type of housing before making the decision. The most important thing for me was to establish credit in Canada from the moment I arrived.”

After Prokofieva decided to buy, she got pre-approved for the mortgage, so she knew what she could afford.

A recent Scotiabank survey found that 45% of newcomers identify a lack of credit history as their biggest obstacle to buying a home in Canada.

Read next: How to Build Credit in Canada: A Guide for Newcomers

How to Get Pre-Approved for a Mortgage in Canada

Getting pre-approved for a mortgage in Canada is a vital first step when you’re ready to buy a home, especially for newcomers who want to understand how much they can afford and strengthen their home-buying credibility.

Here’s a clear, step-by-step breakdown:

1. Check Your Financial Readiness

Before you apply, take stock of your finances:

• Review your income, savings, and debts
• Estimate how much you can afford for a down payment (the minimum is usually 5% of the home price for newcomers)
• Make sure you have funds for closing costs (usually 1.5 – 4% of the purchase price).

💡 Tip: If you’re new to Canada, establishing credit history (through a credit card or small loan) can help you qualify more easily.

2. Gather Your Documents

Lenders need documents to verify your financial situation. Common requirements include:

• Proof of income: recent pay stubs, T4 slips, or employment letters
• Proof of assets: bank statements showing your down payment funds
• Employment verification: confirmation of your job and salary
• Credit history: a Canadian credit report (or, for newcomers, international credit documentation if available)
• Identification: valid ID, SIN number, and immigration documents.

3. Meet with a Lender or Mortgage Specialist

You can apply for pre-approval with:

• A bank (like Scotiabank, RBC, TD, etc.)
• A credit union
• A mortgage broker who can compare options across lenders.

The lender will review your financial details, credit score, and debt-to-income ratio to determine how much they’re willing to lend and at what interest rate.

Tip for Newcomers: Build a Canadian credit history early. You can start by opening a bank account before arrival. Learn more in our Guide to Building Credit in Canada

4. Receive Your Mortgage Pre-Approval Letter

If you qualify, the lender gives you a Pre-Approval Letter, which confirms:

• The maximum mortgage amount you can borrow
• The interest rate (often locked in for 90–120 days)
• The mortgage term and potential payment estimate.

This letter shows real estate agents and sellers that you’re a serious buyer.

5. Use Your Pre-Approval as a Home-Buying Guide

Once pre-approved, you can:

• Shop confidently within your approved budget
• Make stronger offers in competitive housing markets
• Understand what your monthly payments will look like.

Quick Mortgage Approval Checklist

• Review your finances
• Gather your documents
• Meet with a mortgage advisor or bank representative
• Get your pre-approval letter
• Start house-hunting with confidence.

Rent or Own Calculator for Newcomers

Use the Scotiabank Rent or Own Calculator to see whether renting or buying makes the most sense for your financial situation.

If you’d like to learn more about your homebuying options, join our free home ownership for newcomers webinar.

FAQs About Renting versus Buying a Home in Canada

Final Thoughts

Deciding whether to rent or buy a home in Canada is a personal choice that depends on your finances, lifestyle, and long-term goals.

• Renting provides flexibility, lower upfront costs, and easier mobility, making it ideal for newcomers still settling into Canada.
• Buying offers equity, long-term security, and the potential for wealth creation, but comes with additional responsibilities like mortgage payments, property taxes, and maintenance.

For some newcomers, the journey to homeownership takes time, and that’s okay. Whether you start by renting, buying, or exploring a rent-to-own option, or a home co-ownership option. Each path can bring you closer to your goals.

Learn how a rent-to-own program can bridge the gap between renting and buying in our post: Can Newcomers Rent-to-Own a Home in Canada

Before making a decision, carefully evaluate your financial situation, establish a Canadian credit history, and use tools like the Scotiabank Rent or Own Calculator to guide your choice. Sound planning ensures your housing decision supports your life and financial goals in Canada.