Rent vs buy calculator: should you buy a home or keep renting?
Compare buying a home on a loan with renting and investing the difference. Includes stamp duty, maintenance, rent increases and home price growth.
This compares two people who spend the same money every month. One buys a home with a loan. The other rents a similar home and invests whatever the buyer would have spent on top.
Net worth if you buy (yr 15)
₹1.39 Cr
Home ₹1.66 Cr minus loan ₹27.07 L, plus savings
Net worth if you rent (yr 15)
₹2.24 Cr
Down payment and monthly difference, invested
Cash needed to buy
₹21.6 L
Then EMI ₹55,541 a month
Over 15 years, renting and investing comes out ahead by about ₹84.57 L on these assumptions.
Rent here is 3% of the price a year. Below about 3%, renting is often cheaper than owning, unless home prices rise fast.
- Rent and invest
- Buy
Excludes income-tax benefits on home loans, selling costs, rent deposits and the comfort of owning. Change any assumption to test your own case.
Show the numbers
| Year | Buy | Rent and invest | Difference |
|---|---|---|---|
| Year 1 | ₹21,27,375 | ₹28,63,501 | −₹7,36,126 |
| Year 2 | ₹26,86,008 | ₹36,26,902 | −₹9,40,894 |
| Year 3 | ₹32,77,895 | ₹44,55,670 | −₹11,77,774 |
| Year 4 | ₹39,05,170 | ₹53,55,793 | −₹14,50,623 |
| Year 5 | ₹45,70,113 | ₹63,33,830 | −₹17,63,717 |
| Year 6 | ₹52,75,165 | ₹73,96,969 | −₹21,21,804 |
| Year 7 | ₹60,22,938 | ₹85,53,084 | −₹25,30,146 |
| Year 8 | ₹68,16,229 | ₹98,10,806 | −₹29,94,577 |
| Year 9 | ₹76,58,031 | ₹1,11,79,595 | −₹35,21,564 |
| Year 10 | ₹85,51,552 | ₹1,26,69,823 | −₹41,18,271 |
| Year 11 | ₹95,00,230 | ₹1,42,92,862 | −₹47,92,632 |
| Year 12 | ₹1,05,07,749 | ₹1,60,61,182 | −₹55,53,433 |
| Year 13 | ₹1,15,78,058 | ₹1,79,88,460 | −₹64,10,402 |
| Year 14 | ₹1,27,15,396 | ₹2,00,89,698 | −₹73,74,303 |
| Year 15 | ₹1,39,24,307 | ₹2,23,81,355 | −₹84,57,048 |
How the comparison works
- The buyer pays the down payment and one-time costs such as stamp duty and registration, then the EMI and maintenance every month.
- The renter invests the same upfront cash instead. Every month they pay rent and invest the difference between the buyer's costs and their rent.
- If rent ever costs more than the buyer's EMI and upkeep, the buyer invests that difference instead.
At the end, the buyer's net worth is the home's value minus any loan left, plus their investments. The renter's net worth is their investments.
A worked example
Take an ₹80 L flat, 20% down payment, a 8.5% loan for 20 years, and rent of ₹20,000 a month for a similar flat. Assume rent rises 5% a year, the home grows 5% a year, and investments earn 10%.
After 15 years, the buyer is worth about ₹1.39 Cr and the renter about ₹2.24 Cr. On these numbers, renting and investing wins, mainly because the rent is only 3.0% of the price a year.
Now change three assumptions: rent of ₹28,000 (a 4.2% yield), home prices growing 7% a year, and a 20-year stay. The buyer ends up at ₹3.1 Cr against the renter's ₹2.98 Cr, and buying pulls ahead from year 6. The answer depends heavily on rent, price growth and how long you stay.
Rules of thumb for Indian cities
- Rental yield. In most big Indian cities, a year's rent is only about 2–4% of the home's price. A low yield favours renting.
- How long you stay. Stamp duty and registration, often 6–8% of the price across states, are lost the day you buy. Short stays rarely recover them.
- Your investing discipline. Renting wins only if you actually invest the difference every month. If that money would get spent, buying works as forced saving.
What this calculator leaves out
Home-loan tax benefits under the old regime, the cost of selling, rent deposits, brokerage, and tax on investment gains. These can shift the result a little either way, so treat the output as a guide, not a verdict.
Questions people ask
Is it better to rent or buy a house in India?
It depends mostly on rental yield, how long you will stay, and home price growth. With rent at 2–3% of the price and a stay under ten years, renting and investing often comes out ahead. Over long stays with steady price growth, buying can win.
What is rental yield?
A year of rent divided by the property price. A ₹80 lakh flat that rents for ₹20,000 a month has a yield of 3%.
Should I compare rent with EMI?
Not on its own. Compare the full cost of owning: EMI, down payment, stamp duty and maintenance, against rent plus what the renter can earn by investing the money a buyer locks into the home.
What home price growth should I assume?
Long-run growth varies a lot by city and locality. Test a few values, such as 4%, 6% and 8%, rather than relying on the recent past.
This calculator is for education only and is not personalised financial advice. Results depend entirely on the assumptions you enter; real returns, rates and costs will differ. Consider a SEBI-registered adviser for decisions about your own money.