Rent vs Buy Calculator

It compares net worth at the end of your chosen time horizon under two scenarios. In the buying scenario, your net worth is the home's appreciated value minus any remaining loan balance and total maintenance paid. In the renting scenario, your net worth is what your down payment plus any monthly savings (whenever rent is cheaper than the EMI) would grow into if invested at your expected investment return instead. Whichever number is higher at the end of the horizon is shown as the option that builds more wealth.

Not necessarily, and this is one of the most persistent myths in personal finance. Buying tends to look better when home appreciation is strong, loan rates are low, and rent is high relative to EMI. Renting and investing tends to look better when home prices are stagnant or overheated relative to rent, and when the investor can reliably earn strong returns on the money that would otherwise go into a down payment and cover the EMI-rent gap. Run your actual local numbers rather than assuming either answer by default.

For a fair comparison, both scenarios need to start with the same cash and the same monthly budget. A buyer ties up their down payment in the home immediately and commits to a fixed EMI every month. A renter keeps that down payment liquid and, whenever their rent costs less than the equivalent EMI, has monthly cash left over. If that leftover cash simply sat idle instead of being invested, the comparison would unfairly favor buying, since it would ignore what the renter could have done with their money.

In cities where rental yields are low relative to property prices, this does happen, and it usually tilts the comparison toward buying, since the renter has no monthly surplus to invest and is arguably worse off on a pure cash-flow basis every month, in addition to building no equity. The calculator still runs correctly in this case — it simply does not add any monthly investment contribution for the renter beyond the initial down payment amount invested.

Very sensitive, and this is usually the single biggest swing factor in the comparison. Indian residential property has historically appreciated at rates ranging widely by city and cycle, often between 4-10% annually over long periods, though certain locations and years have seen much higher or lower, even negative, returns. Since this number compounds over your entire time horizon, testing a conservative case (lower appreciation) alongside your expected case is worth doing before treating either result as definitive.

This calculator only models the buyer's home value appreciation, not any rental income, since it assumes the buyer lives in the home rather than renting it out. If you are instead comparing buying a property to rent out for income against investing the equivalent capital elsewhere, that is a different calculation involving expected rental yield and vacancy risk, which this specific tool does not model.

This calculator assumes ongoing maintenance and property tax costs equal to roughly 1% of the home's current value each year, a commonly used rule of thumb for Indian residential property, applied to the appreciating home value each year rather than a fixed rupee amount. Actual costs vary by property type, age, society maintenance charges, and location, so treat this as a reasonable estimate rather than your building's exact charges.

This calculator does not separately add stamp duty and registration charges, which typically run 5-8% of property value depending on your state. For a more accurate comparison, you can either increase the home price input by your state's stamp duty percentage to approximate this one-time cost, or treat it as an additional upfront cost the buyer bears beyond what this comparison already shows, which would modestly favor renting further.

If your comparison time horizon is longer than your loan tenure, this calculator correctly stops counting EMI payments once the loan is fully repaid, at which point the buyer owns the home outright with no further monthly housing cost apart from maintenance. The renter, however, continues paying rising rent for the full horizon with no such payoff point, which is one reason buying tends to look more favorable over very long time horizons that extend well past the loan tenure.

This should reflect what you would realistically and consistently earn on the money you would otherwise put into a home, factoring in your actual risk tolerance and time horizon — commonly 8-12% for a diversified equity-oriented portfolio held for the long term, or 6-7% for a more conservative debt-oriented allocation. Using an unrealistically high investment return will make renting look artificially better, so pick a rate you would genuinely expect to sustain, not the best-case scenario.

No, this calculator does not separately add the tax deduction benefit on home loan interest (Section 24b) or principal repayment (Section 80C) available under the old tax regime, since these benefits depend heavily on your individual tax slab, whether you use the old or new regime, and whether you have already exhausted the relevant deduction limits through other investments. If you are in the old regime with unused 80C or 24b room, factor in that additional tax saving separately when weighing the buy option, since it modestly improves the buying case.