Question 1

How is stamp duty calculated in Australia?

Accepted Answer

Stamp duty (transfer duty) is calculated using marginal rate bands that vary by state and territory. Each state has its own rate schedule — for example, NSW applies rates from 1.25% to 5.5% depending on the purchase price. First home buyers may be eligible for a full exemption or sliding-scale concession in NSW, VIC, WA, QLD, TAS, and ACT. The calculator applies the current 2025–26 rates for all 8 states.

Question 2

What is Lenders Mortgage Insurance (LMI) and when do I pay it?

Accepted Answer

LMI is insurance that protects the lender (not you) if you default on your home loan. It is charged when your deposit is less than 20% of the property price — that is, when your loan-to-value ratio (LVR) exceeds 80%. Premiums are typically 0.62%–2.71% of the loan amount depending on LVR. First home buyers who are approved for the federal First Home Guarantee can avoid LMI with as little as a 5% deposit.

Question 3

How many years before buying is cheaper than renting?

Accepted Answer

The break-even point — the year at which buying becomes cheaper than renting when accounting for all costs — typically ranges from 3 to 10 years depending on property price, deposit size, interest rate, rent level, and assumed capital growth. The calculator runs a year-by-year comparison to find the precise break-even year for your inputs.

Question 4

What is the First Home Guarantee?

Accepted Answer

The First Home Guarantee (formerly First Home Loan Deposit Scheme) is a federal government program administered by Housing Australia. It allows eligible first home buyers to purchase a property with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). The government guarantees up to 15% of the loan. Property price caps apply per state — for example, $900,000 in NSW and $800,000 in VIC for 2025–26.

Question 5

Does the rent vs buy calculator account for capital gains tax?

Accepted Answer

No. The 10-year wealth comparison shows gross property equity versus an invested deposit growing at a nominated investment return. It does not deduct capital gains tax (CGT) on the property sale, income tax on investment returns, or negative gearing benefits. These factors can materially affect outcomes and should be assessed with a qualified tax adviser.

Rent vs Buy Calculator

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