Home›Rent vs Buy Calculator

Rent vs Buy Calculator

Compare the true financial cost of renting vs buying over your chosen time horizon in India.

Total Cost ComparisonProperty AppreciationOpportunity Cost

🏡 Property & Loan Details

🏢 Rental Details

The Real Question: Rent vs Buy in India

The rent vs buy debate is more nuanced in India than a simple EMI vs rent comparison. The key hidden factor is opportunity cost — if you rent and invest the down payment (often ₹15–25 lakh) and the difference between EMI and rent into equity mutual funds at 10–12%, you may end up wealthier than if you bought, especially in overvalued markets like Mumbai, Delhi, or Bengaluru.

On the other hand, buying provides a forced savings mechanism, property appreciation over the long term, security of tenure, and freedom to renovate. In Tier-2 cities (Ahmedabad, Pune, Hyderabad), where yield ratios are more reasonable, buying often makes more financial sense.

The Price-to-Rent ratio (property price ÷ annual rent) tells you a lot. If this ratio is above 30 (common in Mumbai, South Delhi, Central Bengaluru), renting is almost always financially superior in the short-to-medium term.

Frequently Asked Questions

What is a good price-to-rent ratio in India?
A ratio below 15 suggests buying is clearly better. 15–20 is borderline. Above 20, renting is financially superior. Mumbai and prime Delhi NCR areas often have ratios of 35–50, making them extremely expensive to own relative to rental value. Tier-2 cities like Ahmedabad, Nagpur, and Jaipur often sit at 15–22.
Does buying always build more wealth than renting?
Not necessarily. If you invest the down payment and the monthly savings (difference between EMI and rent) into equity mutual funds, and if equity returns exceed property appreciation + rental savings, renting wins financially. In high price-to-rent markets, disciplined renters who invest regularly often build more wealth over 10–15 years.
What tax benefits does buying a home give in India?
Home buyers get: Section 24(b) deduction up to ₹2 lakh/year on home loan interest, Section 80C deduction up to ₹1.5 lakh/year on principal repayment, and Section 80EEA for first-time buyers (additional ₹1.5 lakh on interest). These can save ₹1–1.5 lakh/year in tax for someone in the 30% bracket — a meaningful factor not included in this calculator.
When does buying clearly make sense?
Buying is clearly better when: (1) you plan to stay 7+ years, (2) price-to-rent ratio is under 20, (3) you have 20–25% for down payment without depleting emergency funds, (4) EMI is under 40% of take-home income, and (5) the location has solid infrastructure growth potential.