How This Calculator Works
Most calculators only compare mortgage payments to rent. Ours models every cost layer — PMI, HOA, state property taxes, opportunity cost — and shows your real net wealth position.
True Cost of Buying
We include down payment, closing costs, state property taxes (real rates for all 50 states), homeowners insurance, HOA fees, PMI when applicable, maintenance, and all mortgage interest — not just the headline payment.
Opportunity Cost
Your deposit locked in property can't be invested. We model what it earns in a stock portfolio, compounded monthly — then compare your net wealth in both scenarios fairly at your chosen time horizon.
Regional Accuracy
US property tax rates range from 0.28% (Hawaii) to 2.47% (New Jersey). Our calculator pre-fills the correct rate, typical HOA average, and homeowners insurance cost for every state the moment you select it.
Rent vs Buy — Frequently Asked Questions
Common questions about renting vs buying a home in the US and UK — including stamp duty, PMI, HOA fees, and how to calculate your breakeven point.
Is it cheaper to rent or buy a home?
The honest answer is: it depends entirely on your local market, how long you plan to stay, and what you could earn investing your deposit elsewhere. In many UK cities, buying becomes financially superior after 5–7 years when property appreciates steadily. In high-cost US markets like San Francisco or New York, renting can remain cheaper even over a decade if property appreciation is slow and opportunity costs are high. The key variables are your mortgage rate, local rent levels, property price growth, and investment return assumptions. Our calculator models all of these simultaneously, so rather than relying on a rule of thumb, you can enter your specific numbers and see exactly when — and by how much — buying overtakes renting in your scenario.
What is PMI and when does it apply?
Private Mortgage Insurance (PMI) is a policy required by US lenders when your down payment is below 20% of the purchase price. It protects the lender — not you — against default. PMI typically costs between 0.5% and 1.2% of the loan amount per year, paid monthly. On a $400,000 loan, that's roughly $167–$400 per month added to your payment. The good news is that PMI isn't permanent. Once you reach 20% equity — either through repayments or rising property values — you can request cancellation. Under the Homeowners Protection Act, lenders must automatically cancel it at 22% equity. Our calculator applies PMI at 0.6% per year and automatically removes it from your monthly costs once 20% equity is reached based on your amortisation schedule and growth assumptions.
Do all US homes have HOA fees?
No — HOA (Homeowners Association) fees only apply to properties within a managed community, which includes most condominiums, townhouses, and many planned developments. According to the 2024 Census Bureau ACS data, approximately 53% of US homeowners pay HOA fees. The national median is around $135/month, but this varies enormously by property type and region. New-build suburban communities typically charge $150–$300/month. Condos in major cities often run $400–$800/month or higher. The Northeast averages $250–$400/month; the Southeast $200–$300/month. HOA fees cover shared amenities, exterior maintenance, landscaping, and building insurance for common areas. They are a genuine ongoing cost that many buyers underestimate. Our calculator lets you toggle HOA on or off and pre-fills the regional average for your selected state, so you can model both scenarios.
How do property taxes vary by US state?
Property taxes are one of the most significant and variable costs of US homeownership. Effective rates range from just 0.28% per year in Hawaii to 2.47% in New Jersey — nearly a 9x difference. On a $400,000 home, that's the difference between $1,120/year and $9,880/year. High property tax states include New Jersey (2.47%), Illinois (2.19%), New Hampshire (2.18%), Connecticut (2.14%), and Texas (1.69%). Low property tax states include Hawaii (0.28%), Alabama (0.41%), Colorado (0.51%), Nevada (0.59%), and South Carolina (0.57%). These rates matter enormously in a rent vs buy comparison — in Texas, property tax alone can add $500+/month to the cost of owning a median-priced home. Our calculator pre-fills the accurate effective rate, average HOA, and homeowners insurance cost for every US state and Washington D.C. the moment you select it, using 2026 Tax Foundation data.
What are typical US closing costs?
Closing costs are one-time upfront costs paid when a property purchase completes. For buyers, these typically run 2–5% of the loan amount and cover lender origination fees, appraisal, title search, title insurance, prepaid property taxes, homeowners insurance, and attorney fees where required. On a $350,000 purchase with 10% down, buyer closing costs might total $6,300–$15,750. Seller closing costs are separate and typically higher, running 5–6% of the sale price to cover agent commissions and transfer taxes. Coastal and Northeast states (New York, New Jersey, Massachusetts) tend toward the higher end at 3–4% due to attorney requirements and higher transfer taxes. Midwestern states typically run 2–2.5%. Our calculator includes state-specific buyer closing cost estimates in the upfront cost calculation, so your total initial outlay is always accurate.
How much is stamp duty in the UK in 2026?
Stamp Duty Land Tax (SDLT) in England and Northern Ireland is calculated in bands, similar to income tax. For first-time buyers in 2026, there is 0% on the first £425,000 and 5% on the portion between £425,001 and £625,000. Above £625,000, standard rates apply. For standard (non-first-time) buyers: 0% on the first £125,000; 2% from £125,001 to £250,000; 5% from £250,001 to £925,000; 10% from £925,001 to £1.5 million; and 12% above £1.5 million. Additional property purchases (buy-to-let, second homes) attract a 3% surcharge on all bands. Scotland uses Land and Buildings Transaction Tax (LBTT) and Wales uses Land Transaction Tax (LTT), both with different rates and thresholds. Our UK calculator automatically computes your stamp duty based on the 2026 HMRC rates for England and Northern Ireland and adds it to your total upfront costs.
What is opportunity cost and why does it matter?
Opportunity cost is the return you forgo by locking money into a down payment rather than investing it. If you put £50,000 down on a property, that money is no longer available to invest in stocks, bonds, or other assets. Over 10–20 years, the compounding growth you miss out on can be substantial. At a 7% annual return (a reasonable long-run stock market assumption), £50,000 grows to around £98,000 in 10 years and £193,000 in 20 years. Our calculator models your deposit invested at your chosen investment return rate, compounding monthly, and includes this in your total renting net wealth — making the comparison fair. Without accounting for opportunity cost, the calculations systematically overstate the financial benefit of buying. This is one of the most commonly overlooked factors in standard rent vs buy calculators.
When does buying clearly beat renting?
Buying tends to beat renting financially when several conditions align: you plan to stay in the property for at least 5–7 years (long enough to recoup transaction costs), local property prices grow at a healthy rate (3–5%/year in real terms), your all-in monthly ownership cost is reasonably close to what you'd pay in rent, and your mortgage rate is low relative to expected property appreciation. Conversely, renting wins when you have a short time horizon, live in a high price-to-rent ratio market, expect strong stock market returns, or when buying would require overextending financially. The breakeven year — the point at which your net wealth as a buyer surpasses your net wealth as a renter — is the single most useful output. Use our breakeven chart, then stress-test it by adjusting growth assumptions up and down. The range of outcomes is more informative than any single projection.
How does the calculator model homeowners insurance?
Homeowners insurance (HO-3 policy) protects your property against damage, theft, and liability. Premiums vary significantly by state based on local risk factors like hurricane exposure, tornado frequency, wildfire risk, and flood proximity. The national average is around 0.5–1.5% of the home's value per year. High-risk states like Oklahoma (1.31%), Texas (1.59%), and Florida have significantly higher premiums, while states like Oregon (0.31%) and Washington (0.37%) are much lower. Our calculator pre-fills state-specific average rates for all 50 states and D.C., based on 2026 insurance industry data. The annual premium is included in your monthly ownership cost, calculated as a percentage of the current estimated property value (which adjusts as property appreciates over your chosen time horizon).
How accurate are the results?
The calculator produces detailed projections based on the assumptions you input, and uses real 2026 data for state property taxes, average HOA fees, homeowners insurance rates, and UK stamp duty. However, all outputs are projections based on linear assumptions — actual property markets are non-linear, affected by economic cycles, interest rate changes, local supply and demand, and policy changes. The calculator is designed to give you an informed, mathematically rigorous starting point — not a guarantee. We strongly recommend running multiple scenarios: try lower and higher property growth rates, vary the investment return, and test different time horizons. Seeing how sensitive the outcome is to these assumptions is often more valuable than the headline number. Always consult a qualified financial adviser before making any property purchase decision. This tool is for educational purposes only.