Rent vs Buy Calculator
The rent vs buy debate is more complicated than it looks. This compares your net worth after a chosen number of years in both scenarios - factoring in EMI, rent escalation, home appreciation, maintenance, and what you'd earn investing the down payment instead.
How to use
- Enter the home price, how much you'd put down, and your loan terms.
- Enter the rent you'd pay and how much it's likely to increase each year.
- Add your assumptions for home price growth, annual maintenance, and investment returns on the down payment.
- Hit Calculate to see which option leaves you better off financially after your chosen timeframe.
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The rent vs buy question is rarely as simple as EMI vs monthly rent. Buying ties up a large down payment that could otherwise be invested. You take on maintenance costs, property tax, and the risk of slower-than-expected appreciation. Renting keeps capital liquid and avoids transaction costs like stamp duty, registration, and brokerage.
How long you plan to stay matters most. Most financial models show that if you will live somewhere under 5-7 years, renting often wins on raw numbers. Beyond that, it depends on local property appreciation rates, your mortgage rate, and what return you would earn on the down payment if invested instead. This calculator models those variables together.
Frequently Asked Questions
What is the price-to-rent ratio?
Property price divided by annual rent. Below 15 generally favours buying; above 20 often favours renting. In most Indian metros, this ratio is 25-40+, which on pure numbers has historically tilted toward renting, though capital appreciation sometimes offsets this.
How do home loan tax benefits affect the comparison?
Section 80C (principal repayment, up to Rs.1.5L) and Section 24(b) (interest, up to Rs.2L for self-occupied) reduce the effective cost of ownership. Subtract annual tax savings from your ownership cost to get a fairer comparison.
What about renting out the purchased property?
If you plan to rent out the property, rental yield becomes a factor and the tax treatment differs. This calculator focuses on the primary residence decision where you live in the property you buy.
Disclaimer: Results are estimates for informational purposes only and do not constitute financial, tax, or investment advice. Figures may vary based on actual terms. Always consult a qualified financial advisor before making financial decisions.