Rent versus buy is less a math question than a question about which assumptions you believe.
About this calculator
Rent versus buy is less a math question than a question about which assumptions you believe. The honest comparison needs four inputs that people usually ignore: rent inflation, property appreciation, maintenance drag on the owned house, and the opportunity cost of parking the down payment in the bank instead of an index fund. Skip any one of these and the answer flips.
This calculator runs both paths over your chosen horizon. On the rent side, the monthly outflow grows each year by your assumed rent inflation, and the unspent difference between rent and EMI is invested at your opportunity return. On the buy side, you start with the down payment as immediate out-of-pocket, then add the full EMI plus yearly maintenance. At the end of the horizon, the buyer owns an appreciated asset worth some multiple of the original price, while the renter owns a portfolio grown from the saved differential.
For Indian metros the verdict tends to flip between year 7 and year 12 at typical assumptions: home loan near 8.5%, appreciation 4-6%, rent inflation 6-8%, equity opportunity 11-13%. If you plan to move within 5 years, rent almost always wins on pure financial grounds. Past year 10, especially if appreciation holds above 6%, buying usually pulls ahead -- plus the non-financial value of stability. See [[emi]] for the EMI inputs and [[sip]] for how the opportunity-cost corpus grows.
Common uses
- Deciding between a 35k monthly rent and a 80L home purchase with a 20-year loan
- Planning a 10-year posting: rent in a metro and invest the difference, or buy and sell at the end
- Stress-testing the rent-vs-buy verdict when property appreciation assumptions drop from 7% to 3%
- Comparing a smaller affordable home with 25% down versus renting in a prime locality
- Modeling the break-even year when rent inflation outpaces home-loan interest
Frequently asked questions
Is it cheaper to rent or buy a house in India?
Short term, renting is almost always cheaper because you skip the down payment and avoid maintenance and property taxes. Over 10-15 years buying usually wins if property appreciation holds above 5-6% and you actually stay put. The calculator shows the year the two curves cross.
What is a realistic property appreciation rate for Indian metros?
Bangalore, Pune and Hyderabad have averaged 6-9% over the last decade in good micro-markets, while Mumbai and Delhi have been closer to 3-5%. Use 4-5% for a conservative base case and test 7% for an optimistic one. Builder-sold prices are not the right benchmark; resale data is.
Should I include tax benefits on a home loan?
Under the new regime the Section 24 and 80C home-loan deductions are gone, so do not count them. Under the old regime, include them in the buy side: up to 2 lakh interest under Section 24 and 1.5 lakh principal under Section 80C, which can shift the break-even by a year or two.
How does the calculator handle opportunity cost of the down payment?
On the rent side, every rupee you would have spent on EMI plus maintenance above your actual rent is invested at the opportunity return you set. By the end of the horizon this forms a corpus that offsets the cumulative rent paid. This is what most simple rent-vs-buy calculators leave out.
When does renting beat buying?
When your time horizon is under 7 years, when the city has flat or falling property prices, when you can genuinely invest the EMI-minus-rent difference every month, or when you are early in your career and need location flexibility. Running the numbers in this calculator with your specific rent and home price is the honest way to find out.