Glossary & FAQ — buy or rent
The key terms of buying and renting in Quebec, explained simply, and the questions people ask most often.
Glossary
- Down payment
- The share of the price paid in cash at purchase. Legal minimum: 5% up to $500,000, 10% on the portion from $500,000 to $1.5M, 20% above. Both cash and the HBP count.
- Mortgage loan insurance (CMHC)
- Mandatory when the total down payment is under 20%. The premium (2.8% to 4.0% of the loan depending on the down payment) is added to the mortgage balance; the QST on the premium is paid in cash.
- Welcome tax (transfer duties)
- A one-time municipal tax paid at purchase, computed by bracket on the price. Billed 3 to 6 months after closing and payable separately. Calculate by city →
- HBP — Home Buyers' Plan
- Lets a first-time buyer withdraw up to $60,000 from their RRSP, tax-free, for the down payment, repayable over 15 years (1/15 per year).
- FHSA
- First Home Savings Account: deductible contributions and tax-free withdrawals for the down payment on a first home.
- Break-even point
- The year the buyer's net worth catches up to and then exceeds the renter who invests the difference. This is the heart of the "buy or rent" decision.
- Semi-annual compounding
- The Canadian standard for fixed-rate loans: interest is compounded twice a year (not monthly), which makes the real cost slightly different from a monthly calculation.
- Amortization
- The total time to repay the mortgage (often 25 years, up to 30 for a first purchase or new build). Longer lowers the payment but increases total interest paid.
- GDS / TDS (debt ratios)
- GDS (Gross Debt Service) caps housing costs at ~39% of gross income; TDS (Total) caps housing + debts at ~44%. Estimate my capacity →
- Stress test (qualifying rate)
- To get a loan, you must show you could pay at the higher of your rate + 2% and 5.25%, even if the actual rate is lower.
- Equity (net value)
- The property value minus the mortgage balance and selling costs. It's the share of the home you truly own.
- Capital gain — principal residence
- The gain realized on selling your principal residence is tax-exempt in Canada (unlike a taxable investment).
- After-tax return
- An investment's return once tax is deducted. This is the rate compared to property appreciation to judge "buy vs invest the difference".
Frequently asked questions
Is it better to buy or rent?
It depends on three levers: the gap between rent and the cost of owning, the return on your investments, and your time horizon. Under ~5 years, renting is often safer; over the long term, buying often wins — if the renter truly invests the difference. Learn more →
What is the minimum down payment?
5% up to $500,000, 10% on the portion from $500,000 to $1.5M, 20% above. Under 20% total, plan for the CMHC premium.
Can the welcome tax be rolled into the mortgage?
No. It's billed after the purchase and must be paid separately, on top of the down payment.
What salary do you need to buy?
It depends on the price, your debts and the down payment, bounded by the GDS/TDS ratios and the stress test. Estimate your borrowing capacity →
Does the calculator account for the HBP and FHSA?
The HBP is modelled (RRSP withdrawal toward the down payment, with its opportunity cost). Fine FHSA modelling is on the roadmap. See the methodology →
Content provided for informational and educational purposes; it is not financial, tax or legal advice. Rules and schedules can change — confirm with a professional.