Rent vs Buy Calculator
Compare renting against buying over your actual holding period, including opportunity cost.
"Rent is money down the drain" ignores the interest, stamp duty and maintenance that ownership costs, and the return the down payment could have earned elsewhere. This calculator runs both paths over the years you actually intend to stay and reports which leaves you wealthier.
The two options
Result
Fill in the fields above and your result will appear here.
What the Rent vs Buy Calculator does
An honest comparison has to give the renter credit for investing the money a buyer spends upfront. A ₹16 lakh down payment plus ₹5.6 lakh of stamp duty, compounding for ten years, is a large number — and ignoring it is what makes most rent-versus-buy arguments meaningless.
The two decisive inputs are the holding period and the appreciation assumption. Stamp duty and early-year interest make short holdings expensive; appreciation is what eventually overcomes them. Under about seven years, renting usually wins.
How to use this tool
- Enter your current rent and the annual increase your agreement provides for — 5–10% is typical.
- Enter the property price, down payment percentage, and your state's stamp duty and registration rate.
- Enter the loan rate and tenure, then maintenance and property tax for the property you are considering.
- Set a conservative appreciation figure. Testing 4%, 6% and 8% shows how much the answer depends on it.
- Set the holding period honestly, and the return you would realistically earn on invested savings.
Formula and method
BUYING
Upfront = Down payment + Stamp duty and registration
Outflow = Upfront + EMI × months + Maintenance + Property tax
Equity = Property value − Selling cost − Outstanding loan
Net = Equity − Outflow
RENTING
Outflow = Σ Rent, escalated each year
Wealth = Future value of (upfront amount not spent)
+ Future value of monthly savings vs owning
Net = Wealth − Outflow
Break-even year: the first year in which the buyer's net position
exceeds the renter's.
Worked example
Example: ₹80 lakh property vs ₹30,000 rent, 10 years
| Upfront to buy (20% + 7% stamp duty) | ₹21,60,000 |
| EMI at 8.5% over 20 years | ₹55,540 |
| Rent in year 10 at 7% escalation | ₹55,100 a month |
| Property value at 6% appreciation | ₹1,43,26,000 |
Rent catches up with the EMI by year ten, which is exactly why the holding period matters so much. Over five years the renter is comfortably ahead; over fifteen, the buyer usually is.
What your result means
The break-even year is the number to focus on. If it is beyond how long you plan to stay, renting is the better financial decision — regardless of how the conversation usually goes at family gatherings.
The result is highly sensitive to appreciation. Run it at 4% and at 8% before deciding. If the answer flips, you are betting on the property market rather than making a calculation.
Buying also buys things this model cannot price: security of tenure, freedom to renovate, and no landlord asking you to vacate. Those are real, and for many households they outweigh a modest financial advantage to renting.
Important considerations
- Stamp duty and registration vary widely by state, and several states offer a concession for women buyers. Use your state's actual rate.
- Home loan interest and principal attract tax deductions under the old regime, which improves the buying case for taxpayers who use them. This model does not include them, so it is conservative towards buying.
- Under-construction property carries delivery risk and often means paying rent and pre-EMI simultaneously.
- Maintenance and society charges rise over time. The model escalates them at 5% a year.
- A property is illiquid. Selling can take months and rarely achieves the headline market rate.
- Job mobility matters. Buying in a city you might leave in three years is usually an expensive decision.
Limitations of this tool
- It does not model income tax deductions on home loan interest or principal, which favour buying under the old regime.
- Appreciation is applied uniformly. Real property markets move in cycles, with long flat periods.
- It assumes the renter actually invests the difference. In practice many people do not, which changes the real-world outcome considerably.
- Rental yield, sub-letting income and the possibility of the property being rented out are not modelled.
Frequently asked questions
Is it better to rent or buy in India?
It depends almost entirely on how long you will stay and what you assume about appreciation. Under about seven years, renting usually wins because stamp duty and early-year interest dominate. Beyond ten to twelve years, buying typically pulls ahead.
Why does the calculator favour renting so often?
Because it credits the renter with investing the down payment and stamp duty. That is the honest comparison, and it is the part most arguments leave out. If you would not actually invest that money, the real-world answer shifts towards buying.
Does this include home loan tax benefits?
No. Deductions on interest and principal under the old regime would improve the buying case. The model is deliberately conservative towards buying on this point — factor them in separately if you claim them.
What appreciation rate should I assume?
Be conservative. Many Indian residential markets have delivered low single-digit appreciation over long periods, well below the returns often quoted at the time of purchase. Test 4% and 8% and see whether the conclusion changes.