Rent vs Buy Calculator – Should You Rent or Buy a Home?
Compare buying a home with a loan against renting and investing the difference.
Rent vs Buy Calculator
What does the rent vs buy calculator do?
Buying a home is the largest financial decision most families make. Our rent vs buy calculator compares two paths over the same period: buying a home with a down payment and a home loan, or renting a similar home and investing the money you would otherwise have spent on buying. At the end it shows your net worth under each path.
How the comparison works
If you buy
- You pay the down payment plus 7% stamp duty and registration upfront.
- You pay the home loan EMI plus maintenance and property tax (assumed 0.5% of home value a year).
- Your wealth is the home value (grown at the appreciation rate) minus the outstanding loan.
If you rent
- You invest the upfront cost (down payment + stamp duty) at the investment return rate instead.
- Each month, if owning costs more than rent, the renter invests the difference. If rent is higher, the buyer invests the difference instead.
- Rent rises every year by the rent increase rate.
Both paths therefore spend exactly the same money each month, making the comparison fair. Investments compound monthly.
How to use the calculator
- Enter the property price, down payment %, loan rate and tenure.
- Enter the rent for a similar home and its expected yearly increase.
- Set expected property appreciation and investment return.
- Choose the comparison period and see which path leaves you richer.
Example: ₹80 lakh home vs ₹25,000 rent
Assumptions: 20% down payment, 8.5% loan for 20 years (EMI ₹55,541), rent ₹25,000 rising 5% a year, property appreciation 5%, investment return 10%.
| Period | Net worth if you buy | Net worth if you rent | Better option |
|---|---|---|---|
| 5 years | ₹45,70,113 | ₹60,24,784 | Rent |
| 10 years | ₹85,51,552 | ₹1,18,77,956 | Rent |
| 15 years | ₹1,39,24,307 | ₹2,08,62,953 | Rent |
| 20 years | ₹2,12,26,382 | ₹3,48,22,490 | Rent |
| 25 years | ₹3,19,46,351 | ₹5,72,93,754 | Rent |
Sensitivity to property appreciation (20 years)
The result depends heavily on how fast property prices rise relative to investment returns:
| Appreciation | Net worth if you buy | Net worth if you rent | Better option |
|---|---|---|---|
| 5% | ₹2,12,26,382 | ₹3,48,22,490 | Rent |
| 7% | ₹3,09,57,476 | ₹3,54,66,710 | Rent |
| 8% | ₹3,72,87,657 | ₹3,58,44,796 | Buy |
What the numbers usually show
In large Indian cities rental yields are only 2–3% of property value, while home loan rates are 8–9%. That gap means renting and investing often builds more wealth on paper, unless property appreciation is strong or you stay for a long time. Buying wins when rents are high relative to prices, appreciation is healthy, or the renter would not actually invest the difference.
Factors the calculator does not capture
- Tax benefits on home loan interest and principal (old regime).
- Security of tenure and freedom to customise your home.
- Brokerage, moving costs and rental deposits.
- The behavioural risk that invested savings get spent.
Before deciding, check how much you can borrow with the home loan eligibility calculator, plan the EMI with the home loan EMI calculator and estimate investment growth with the SIP calculator.
How to read the result
The headline card shows which option leaves you with more net worth and by how much. Treat it as a guide to the financial trade-off, not a final verdict. Small changes in appreciation, rent growth or investment return can flip the answer, so test optimistic and pessimistic scenarios. If buying wins only under optimistic assumptions, renting is the safer financial choice; if buying wins even under conservative ones, it is a strong case. The comparison period also matters: transaction costs of buying are large, so buying rarely wins over short horizons of under five to seven years. If you expect to relocate for work, renting usually keeps you more flexible.
Frequently asked questions
Is it better to rent or buy a house in India?
It depends on price-to-rent ratio, loan rate, appreciation and how long you stay. In metros, renting and investing the difference often builds more wealth, but buying can win over long periods or when appreciation is strong.
What appreciation rate should I assume?
Long-run residential price growth in many Indian cities has been around 4–7% a year, varying widely by location. Test several values.
Does the calculator include stamp duty?
Yes. It assumes 7% of the property price for stamp duty and registration, and 0.5% of the home value each year for maintenance and property tax.
Why does the renter invest the down payment?
To make a fair comparison, both paths use the same money. Money the buyer spends on a down payment, the renter invests instead.