Rent vs Buy Calculator
Compare your net worth if you buy with a home loan vs rent and invest the difference. Factor in EMI, property appreciation, rent increases, purchase and selling costs, and investment returns.
Property & Loan Details
Annual % of property value
Rent & Investment Details
Pre-tax return on invested money (assumption; Nifty 50 TRI: ~12.4% since inception, ~8.3% over 5 yrs)
Varies by state; check your state’s rates
Brokerage etc. if you sold at the end (assumption)
Old regime only: interest deduction up to ₹2 lakh/yr (Sec 22(2)), plus 4% cess
Better option
- Net worth if you buy
- Net worth if you rent
- Property value at end
Net Worth Over Time: Buy vs Rent
Year-by-Year Comparison
| Year | Property Value | Loan Outstanding | Net Worth (Buy) | Net Worth (Rent) | Better Option |
|---|
How this works: both of you spend the same each month. The buyer pays the down payment, stamp duty and registration up front, then the EMI plus maintenance/property tax (a % of the current property value). The renter invests that upfront cash instead, pays rent, and invests the difference whenever the buyer’s monthly cost is higher; if rent is higher (for example after the loan is repaid), the buyer invests the difference. Net worth if you buy = property value − selling costs − loan still outstanding + the buyer’s investments. Net worth if you rent = the renter’s investments. Tax benefit (optional, old regime only): interest deduction up to ₹2 lakh/year under Section 22(2) of the Income-tax Act, 2025, at your slab plus 4% cess, invested each year. Principal under Section 123 is not counted because the ₹1.5 lakh limit is usually already used by EPF/PPF. Not included: capital gains tax on the property or on investments, home insurance, brokerage on renting. EMI is fixed for the loan tenure. All rates are assumptions; results are indicative.
Should You Rent or Buy a Home in India?
Buying is not always cheaper than renting in India: it depends on your rent, your EMI and what the money you don't put into the house would earn. This calculator compares your net worth at the end of your chosen horizon under both options, counting property appreciation, rent increases, purchase and selling costs, and the returns on the money each side invests. If you are in the old tax regime you can include the home loan interest deduction under Section 22(2) of the Income-tax Act, 2025 (up to ₹2 lakh a year, formerly Section 24(b)), which the new regime, the default, does not allow. The full method, from rental yield to the tax rules, is in our guide with a worked Mumbai 2BHK example.
How to Use This Rent vs Buy Calculator
- 1
Enter the property price and loan details
Set the property value, down payment percentage, home loan interest rate, and tenure. The calculator computes your EMI automatically. Enter your state’s stamp duty and registration charges (the 7% default is only an example) and the cost of selling at the end.
- 2
Set your current rent and expected increases
Enter your monthly rent and the annual rent hike you expect (5-8% is typical in Indian metros). This determines how much renting costs you over the comparison period.
- 3
Adjust property appreciation and investment returns
Property appreciation varies widely by city and locality, so treat it as an assumption and try a few values. Investment return is what the money not spent on the house earns (pre-tax); the Nifty 50 TRI returned about 11% a year over the 10 years to September 2026 but about 6% over the last five. Also choose whether you claim the home loan interest deduction (old regime only).
- 4
Review the verdict and year-by-year breakdown
The calculator shows which option leaves you with more net worth, a chart of both over time, and a year-by-year table with the property value and loan still outstanding.
Hidden Costs of Home Buying
Stamp Duty & Registration
Stamp duty and registration charges vary by state. At 7% in total, an ₹80 lakh property costs an extra ₹5.6 lakh -- money that never appreciates or comes back.
Maintenance & Repairs
Society maintenance, annual repairs, painting, plumbing, and appliance replacements typically cost 1-2% of property value annually. This is an ongoing expense that renters do not bear.
Property Tax
Municipal property tax is an annual recurring cost that increases over time. Combined with maintenance, this adds a significant burden beyond your EMI payments.
Opportunity Cost of Down Payment
A ₹16 lakh down payment (20% of ₹80L) invested at 12% CAGR grows to ₹1.54 crore in 20 years. Compare that with what the home itself is worth by then, since the down payment buys equity in the house rather than disappearing.
When Renting Makes More Sense
High price-to-rent ratios: In expensive metros, property prices are often many times the annual rent. The higher the price-to-rent ratio, the more likely renting and investing comes out ahead. A ₹1 crore flat that rents for ₹25,000/month has a price-to-rent ratio of 33x -- heavily favoring renting.
Job mobility: If you are likely to relocate within 5-7 years, buying rarely makes sense after factoring in transaction costs (stamp duty, brokerage, capital gains tax). Try different comparison periods above to see how long you would need to stay for buying to come out ahead.
Investment returns exceed appreciation: If your expected investment returns significantly exceed the appreciation you expect on the property, the wealth you build by renting and investing the difference will far outpace the equity in a home, and the gap widens the longer you stay.
When buying makes sense: If rent is high relative to EMI, you plan to stay 15+ years, property is in a high-growth corridor, or you value the stability and emotional security of ownership. Also, forced savings via EMI can be valuable for those who would not otherwise invest consistently.
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