Rent vs Buy Calculator
Net worth at your horizon on both paths, with the renter investing every rupee the buyer sinks.
- Buy
- Rent and invest
The only honest way to compare these is terminal net worth on two fully-specified paths, where the renter invests every rupee the buyer sinks and they do not — the down payment, the stamp duty and registration, and each year's difference between ownership outgo and rent. Leave that out and buying looks free. The buyer's side counts the loan EMI, maintenance at 1% of the home's value a year, property tax, and 2% selling costs at the end; the home is assumed to appreciate at the rate you set, which is the single assumption the answer is most sensitive to. Two things are deliberately not modelled: the security and optionality of owning, which do not appear in a spreadsheet, and rental yields in Indian metros, which at 2 to 4% are low enough that the rent you enter should be checked against the price you enter rather than assumed. Home-loan tax relief is old regime only and is not applied above — under the new regime, which is the default, section 24(b) and section 80C give a self-occupied buyer nothing, and that alone flips many answers that older calculators still show as favouring purchase.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
The only defensible way to compare renting and buying is terminal net worth on two fully-specified paths, where the renter is assumed to invest every rupee the buyer sinks and they do not — the down payment, the stamp duty and registration, and each year's difference between ownership outgo and rent. Leave that investment out and buying looks free, which is why so many comparisons favour it.
The buyer's side counts the EMI, maintenance at around 1% of the home's value a year, property tax, and the cost of selling at the end. The renter's side counts rent rising with inflation and a corpus compounding at the return you assume. The single assumption the answer is most sensitive to is property appreciation, which is also the one nobody can forecast.
One structural change is worth knowing before reading any older comparison: home-loan tax relief is old-regime only. Under the new regime, the default since AY 2024-25, section 24(b) and section 80C give a self-occupied buyer nothing at all, and that alone flips many answers that used to favour purchase.
Buy: home value grown at the appreciation rate, less selling costs, less the outstanding loan. Rent: the down payment and transaction costs invested from day one, plus each year's ownership outgo minus rent, compounded at the assumed return.The break-even year is where the buyer's net worth first overtakes the renter's. Before it, renting and investing is ahead; after it, buying is — which is why the horizon matters as much as the rates.
Frequently asked questions
How long do I need to stay for buying to make sense?
Long enough for appreciation to outrun the transaction costs on both ends, which in Indian metros usually means somewhere between seven and fifteen years depending on the price-to-rent ratio and the rates you assume. Stamp duty, registration and brokerage cost 5% to 11% of the price going in, and roughly 2% going out; a purchase held for three years rarely recovers that.
Why do Indian rental yields make buying look expensive?
Gross rental yields in Indian metros run around 2% to 4%, meaning a property costing ₹1 crore rents for ₹2 to ₹4 lakh a year. Since home-loan rates are around 8.5%, the rent is well below the interest alone, so early in the loan the renter has a large monthly surplus to invest. Buying wins on capital appreciation rather than on running cost, which is exactly why the appreciation assumption dominates the answer.
Does this calculator include the tax benefits of a home loan?
Not by default, because they are old-regime only and the new regime is now the default. Under the old regime you could deduct up to ₹2 lakh of interest under section 24(b) and the principal within the ₹1.5 lakh section 80C basket. If you file under the old regime, the buying side would improve by roughly your marginal rate applied to those amounts — though note the renter would then have less surplus to invest, so the gap narrows by less than the headline relief.
What is not in this comparison at all?
Everything that does not have a number. Security of tenure, freedom to renovate, not having to move when a landlord decides to sell, and the discipline a forced monthly payment imposes on people who would not otherwise invest — all real, none quantified here. Against those, ownership concentrates a very large share of your net worth in one illiquid asset in one city. Treat the output as the financial half of the decision.