Why Buying a House at 25 Could Cost This Engineer $6 Million
A 25-year-old software engineer in Ottawa is on track to save $3,800 per month in his TFSA and RRSP. At a 7% annual return, that pace reaches $6 million by age 65. The down payment on a $650,000 home would take $100,000 out of that stream. That $100,000, compounded over 40 years at the same 7%, becomes $1.5 million in forgone gains. Add in the property taxes, maintenance, and mortgage interest that don't build equity, and the lifetime spread widens to roughly $3 million. The question isn't whether homeownership costs money. It's whether that cost is buying something worth more than the alternative.
The arithmetic nobody runs in advance
The FHSA lets this engineer shelter $8,000 per year toward a down payment, tax-free, with a $40,000 lifetime cap. That's a real benefit. But it's also a cap. The TFSA contribution limit for 2026 is $7,000 annually, indexed to inflation, with no lifetime maximum. The RRSP allows contributions up to 18% of earned income, to a 2026 ceiling of $33,810. An engineer making $95,000 can max both accounts and still have surplus to invest in a taxable brokerage. The FHSA displaces contributions to those accounts during the savings period, and then the down payment removes capital permanently. The longer the savings period, the more compounding gets sacrificed twice: once during accumulation, once after deployment.
Every mortgage calculator shows monthly payments. Almost none show the present value of the equity you'd have built if you'd invested the spread between renting and owning instead. In Ottawa's Westboro neighbourhood, a one-bedroom apartment rents for around $1,850 per month. The all-in cost of owning a comparable condo, mortgage interest, property tax, insurance, condo fees, maintenance reserve, runs closer to $2,900. That $1,050 monthly gap, invested at 7%, compounds to $2.6 million over 40 years. The condo appreciates, but at Ottawa's historical rate of roughly 4% annually, net of transaction costs and the periods where you're underwater on leverage during rate spikes. The rent-versus-own gap is not a rounding error. It's the difference between catching the last decade of compounding and missing it.
What real estate actually buys you
Homeownership solves a non-financial problem that matters to some people and doesn't to others. It eliminates the risk that a landlord sells, renovates, or raises rent beyond your budget. It provides stable housing cost in retirement if the mortgage is paid off. It allows leverage that stock investors cannot safely access, 5% down turns a 5% home-price gain into a 100% return on the down payment, at least on paper. And under Canada's Principal Residence Exemption, all gains are tax-free. None of those are trivial.
But they don't make the trade automatic. The same young engineer who buys in Ottawa at 25 might take a $140,000 job offer in San Francisco at 29. The mortgage is an anchor. Selling costs roughly 5% of the home's value in realtor commissions and legal fees. Four years of ownership in a flat or declining market means selling at a loss after fees, or turning down the job. The liquidity cost of homeownership is hardest to see at 25, when career optionality is worth the most and the future is illegible.
The six-million-dollar threshold isn't the point
Reaching $6 million requires discipline that most people don't sustain regardless of whether they own a home. The threshold is illustrative. The actual tradeoff is between a tax-free compound growth engine and a leveraged, illiquid, inflation-hedged asset with non-recoverable costs. If stable shelter and forced savings matter more than mobility and liquid wealth, buy. If career flexibility and long-duration compounding matter more, rent and invest the spread. Both are rational. The financial cost is substantially different depending on which you choose.
A 25-year-old software engineer in Ottawa is on track to save $3,800 per month in his TFSA and RRSP. At a 7% annual return, that pace reaches $6 million by age 65. The down payment on a $650,000 home would take $100,000 out of that stream. That $100,000, compounded over 40 years at the same 7%, becomes $1.5 million in forgone gains. Add in the property taxes, maintenance, and mortgage interest that don't build equity, and the lifetime spread widens to roughly $3 million. The question isn't whether homeownership costs money. It's whether that cost is buying something worth more than the alternative.
The arithmetic nobody runs in advance
The FHSA lets this engineer shelter $8,000 per year toward a down payment, tax-free, with a $40,000 lifetime cap. That's a real benefit. But it's also a cap. The TFSA contribution limit for 2026 is $7,000 annually, indexed to inflation, with no lifetime maximum. The RRSP allows contributions up to 18% of earned income, to a 2026 ceiling of $33,810. An engineer making $95,000 can max both accounts and still have surplus to invest in a taxable brokerage. The FHSA displaces contributions to those accounts during the savings period, and then the down payment removes capital permanently. The longer the savings period, the more compounding gets sacrificed twice: once during accumulation, once after deployment.
Every mortgage calculator shows monthly payments. Almost none show the present value of the equity you'd have built if you'd invested the spread between renting and owning instead. In Ottawa's Westboro neighbourhood, a one-bedroom apartment rents for around $1,850 per month. The all-in cost of owning a comparable condo, mortgage interest, property tax, insurance, condo fees, maintenance reserve, runs closer to $2,900. That $1,050 monthly gap, invested at 7%, compounds to $2.6 million over 40 years. The condo appreciates, but at Ottawa's historical rate of roughly 4% annually, net of transaction costs and the periods where you're underwater on leverage during rate spikes. The rent-versus-own gap is not a rounding error. It's the difference between catching the last decade of compounding and missing it.
What real estate actually buys you
Homeownership solves a non-financial problem that matters to some people and doesn't to others. It eliminates the risk that a landlord sells, renovates, or raises rent beyond your budget. It provides stable housing cost in retirement if the mortgage is paid off. It allows leverage that stock investors cannot safely access, 5% down turns a 5% home-price gain into a 100% return on the down payment, at least on paper. And under Canada's Principal Residence Exemption, all gains are tax-free. None of those are trivial.
But they don't make the trade automatic. The same young engineer who buys in Ottawa at 25 might take a $140,000 job offer in San Francisco at 29. The mortgage is an anchor. Selling costs roughly 5% of the home's value in realtor commissions and legal fees. Four years of ownership in a flat or declining market means selling at a loss after fees, or turning down the job. The liquidity cost of homeownership is hardest to see at 25, when career optionality is worth the most and the future is illegible.
The six-million-dollar threshold isn't the point
Reaching $6 million requires discipline that most people don't sustain regardless of whether they own a home. The threshold is illustrative. The actual tradeoff is between a tax-free compound growth engine and a leveraged, illiquid, inflation-hedged asset with non-recoverable costs. If stable shelter and forced savings matter more than mobility and liquid wealth, buy. If career flexibility and long-duration compounding matter more, rent and invest the spread. Both are rational. The financial cost is substantially different depending on which you choose.
Sources
Read Next
How Dual Citizens Can Claim RESP Tax Benefits Without Form 3520 Reporting
Bond Markets Are Pricing In Recovery, Not the 1970s Replay Already Underway
Why Fortress Tells Private Credit Lenders to Stop Chasing AI Data Centre Deals
Canada's Tax Code Punishes Work and Rewards Wealth Hoarding: Four Reforms That Would Actually Fix It