Rent vs Buy Calculator by State: When Buying Wins

Compare a buyer's and a renter's net worth year by year, with US state taxes and PMI or UK stamp duty, deposit and mortgage rate.

Rent vs buy in the US or the UK: how the simulator compares net worth

The simulator tracks two balance sheets year by year: the buyer's (home value minus the outstanding loan, minus selling costs and capital gains tax when those options are on) and the renter's, who invests the down payment and the gap between the cost of owning and the rent. The break-even year is the first in which the buyer pulls ahead. With the US defaults ($367,000 home, 20% down, 7.32% on a 30-year fixed loan, $1,930 rent, 5% return, 6% selling costs), it arrives in year 23.

Method

  • Buyer: borrows price + closing costs − down payment over a term equal to the horizon (30 years in the US version). Net worth is the home value, which grows each year, minus the outstanding loan, minus selling costs and capital gains tax when those options are on.
  • Renter: starts with the down payment invested, the same initial outlay as the buyer. Each year they add (or withdraw) the gap between the monthly cost of owning (loan payment, property tax, HOA fees, maintenance, PMI) and their rent, then the whole pot earns the chosen return.

US default values

  • Home price $367,000 and rent $1,930: Zillow's typical U.S. home value ($366,913) and typical rent ($1,932) from its September 2026 market report (October 6, 2026), rounded, so that price and rent come from the same source.
  • Rate 7.32%: Freddie Mac Primary Mortgage Market Survey, 30-year fixed, week of October 22, 2026.
  • Closing costs $11,000, 3% of the price, within the usual range of 2% to 5%. The simulator adds them to the loan.
  • Property tax $2,899 a year: 0.79% of the price, the median of the 50 states and D.C. in the table below. Pick your state to apply its 2024 effective rate (Tax Foundation, from Census Bureau ACS data).
  • Maintenance $3,670 a year, 1% of the price (a common rule of thumb; add your homeowners insurance premium here). No HOA fees.

Options

  • PMI: charged when the down payment is under 20% of the price, at 0.6% of the initial loan a year, until the balance falls to 78% of the purchase price, the point where the Homeowners Protection Act makes cancellation automatic. Freddie Mac puts PMI at roughly $30 to $70 a month per $100,000 borrowed (0.36% to 0.84% a year): 0.6% is an estimate in the middle of that range.
  • Selling costs: 6% of the home value is deducted every year, as if the home were sold that year. This is an estimate: since the 2024 NAR settlement, agent commissions are negotiated.
  • Capital gains tax: 15% on the gain (sale price − purchase price − closing costs − selling costs) above $250,000, the exclusion on the sale of a main home for a single filer (IRS Publication 523; $500,000 for a married couple filing jointly). The long-term rate is 0%, 15% or 20% depending on income.

Worked example

With the defaults, $304,600 is borrowed and the payment is $2,092.39. Owning costs $2,639.81 a month in year one, against $1,930 in rent. At the start, the buyer would net $40,380 after selling costs, while the renter holds $73,400. After 10 years: $155,372 against $205,656. The buyer moves ahead in year 23; at 30 years, $601,699 against $492,014. With a 3% return, break-even comes in year 14; with no price growth, never within 30 years; without selling costs, in year 19. With 10% down ($36,700), PMI adds $170.65 a month for 12 years and the renter stays ahead over 30 years.

Simplifications

  • Amortization is approximated year by year, which leaves a loan balance at the end of the term.
  • Rent, rental charges and HOA fees rise at the same annual rate; property tax and maintenance stay flat.
  • Closing costs are fully financed by the loan; the renter invests only the down payment.
  • No homeowners insurance line, no mortgage interest deduction and no tax on the renter's investment returns.

UK mode: stamp duty, council tax, no PMI

  • Stamp Duty Land Tax (England and Northern Ireland), residential rates for purchases from 1 April 2025: 0% up to £125,000, 2% from £125,001 to £250,000, 5% up to £925,000, 10% up to £1.5 million and 12% above. First-time buyer relief: 0% up to £300,000, then 5% from £300,001 to £500,000; above £500,000 there is no relief. The 5% surcharge on an additional home and the 2% non-resident surcharge are not applied. Like other buying costs, the tax is added to the loan. Scotland (LBTT) and Wales (LTT) have their own taxes: switch stamp duty off and enter yours under other buying costs.
  • Council tax: it is paid by whoever lives in the home, owner or tenant. The tool therefore asks for both amounts, and only the gap counts. Both start at £1,868, the average per dwelling in England for 2026-27.
  • No PMI and no capital gains tax: there is no private mortgage insurance in the UK, and selling your main home is usually free of Capital Gains Tax.
  • Starting values: a £273,000 home (average UK house price, August 2026, provisional) and £1,406 rent (average UK private rent, September 2026), both from the ONS bulletin of 21 October 2026; a 4.60% rate, the effective rate on newly drawn mortgages in August 2026 (Bank of England), applied over the whole 25-year term although most of these loans are fixed for 2 to 5 years. The 20% deposit (£54,600), the 25-year term and maintenance at 1% of the price are assumptions; other buying costs and selling costs start at zero for you to fill in.

With these values, stamp duty is £3,650 and £222,050 is borrowed, for a payment of £1,246.86. Owning costs £1,474.36 a month in year one against £1,406 in rent, so the buyer is ahead from year 1: £169,353 against £80,543 after 10 years and £440,341 against £40,621 after 25 years. With 2% selling costs, the buyer moves ahead in year 2. A first-time buyer pays no stamp duty at this price. If you rent in a cheaper council tax band, enter both amounts: with £2,392 as owner (the Band D average) and £1,868 as tenant, the renter has £87,463 after 10 years.

Sources (read on 27/10/2026): gov.uk, Stamp Duty Land Tax: residential property rates (rates for transactions from 1 April 2025, per HMRC's policy paper of 28 November 2022); ONS, Private rent and house prices, UK: October 2026; Bank of England, Money and Credit, August 2026 (29 September 2026); gov.uk, Council Tax levels set by local authorities in England 2026 to 2027 (25 March 2026); gov.uk, Tax when you sell your home.

An indicative simulation that does not replace advice from an adviser.

Frequently Asked Questions

After how many years does buying beat renting?

With the US defaults ($367,000 home, 20% down, 7.32% 30-year fixed loan, $1,930 rent, 5% investment return, 2% annual price growth, 6% selling costs), the buyer overtakes the renter in year 23. Without selling costs, it happens in year 19. The break-even point moves a lot with the investment return and house price growth.

What investment return should I assume for the renter?

It is the most sensitive input. In the default example, a 3% return makes buying win from year 14, while at 5% it takes 23 years and at 7% the renter stays ahead over 30 years ($885,438 against $601,699). Use a return net of fees that matches your actual savings.

What if the home's value does not rise?

With 0% price growth, buying never catches up with renting over 30 years in the default example: $321,795 of net worth for the buyer against $492,014 for the renter. With 3% a year, the buyer pulls ahead in year 12.

Which costs of buying does the simulator include?

The loan payment ($2,092.39 for $304,600 borrowed at 7.32% over 30 years), property tax, HOA fees and maintenance, which comes to $2,639.81 a month in year one, plus PMI when the down payment is under 20%. Selling costs and capital gains tax are deducted from the buyer's net worth. Homeowners insurance has no line of its own: add it to maintenance.

How does my state's property tax change the result?

Choosing a state applies its 2024 effective rate (Tax Foundation, from Census Bureau ACS data) to the home price. On a $367,000 home, New Jersey (1.88%) means $6,900 a year and Texas (1.40%) $5,138, against $2,899 at the 0.79% median. In both states, the renter stays ahead over 30 years with the other defaults.

Does the calculator work for the UK?

Yes: choose United Kingdom in the Country field. Amounts switch to pounds, stamp duty is worked out from the price with the rates in force since 1 April 2025 (England and Northern Ireland), council tax replaces property tax and PMI disappears. With the starting values (£273,000 home, 20% deposit, 4.60% over 25 years, £1,406 rent) and no other buying or selling costs entered, buying is ahead from year 1.

How much stamp duty is due on a £273,000 home?

£3,650 at the standard rates: nothing on the first £125,000, 2% on the next £125,000 (£2,500) and 5% on the remaining £23,000 (£1,150). A first-time buyer pays nothing up to £300,000, then 5% up to £500,000. These rates apply in England and Northern Ireland; Scotland and Wales have their own taxes.

Is this tool really free?

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