Rent vs Buy Calculator - Should You Rent or Buy a House?
Compare the total cost of renting vs buying a house. Calculate breakeven point, EMI vs rent, and make an informed property decision.
Buying a House
Total cost of the property
Upfront payment (typically 20%)
Current home loan rates: 8-9%
Loan repayment period
State-specific stamp duty rate
Expected yearly property value increase
Society fees, repairs, etc.
Annual property tax to municipality
Renting a House
Current monthly rent
Yearly rent increase (typically 5-10%)
Refundable security deposit
If you invest down payment in mutual funds
Comparison Period
Time horizon for comparison
Our Recommendation
Renting is more cost-effective for 15 years
Total Cost After 15 Years
Renting is cheaper, and you can invest the difference for better returns.
Monthly Cost Comparison
Property Value After 15 Years
₹50,00,000
Property appreciates at 6% per year
Different Scenarios - When to Buy vs Rent
Live in Same City Forever
Planning to settle permanently? Strong job security and family roots?
Buying is usually better for long-term stability
May Relocate in 5 Years
Job might require relocation? Career growth in different cities?
Renting offers flexibility without selling hassles
Uncertain About City
Not sure if you'll stay? Testing out the city or job?
Keep options open, avoid commitment
Non-Financial Factors to Consider
Ownership & Stability
Owning gives you stability, freedom to renovate, and emotional satisfaction of "my home"
Job Stability
Will you stay in this city? Can you afford EMI if you lose your job? Consider emergency fund
Family Situation
Kids need stable schooling? Elderly parents? Buying provides family security
Liquidity
Can you sell easily? Real estate is illiquid - it may take months to sell in emergencies
Rental Market
Is good rental property available? Metro cities have excellent rental options
Maintenance Headaches
Owners deal with repairs, society issues. Renters just call the landlord
Understanding Rent vs Buy Decision
The rent vs buy decision is one of the biggest financial choices you'll make. While buying a house is often seen as a milestone, it's not always the financially optimal choice. This calculator helps you make an informed decision based on your situation.
Hidden Costs of Buying
- Stamp Duty & Registration: 5-8% of property value (₹2.5-4L on ₹50L property)
- Home Loan Interest: You pay almost 2x the principal over 20 years
- Maintenance: ₹2-5 per sq ft monthly (₹2,000-5,000/month for 1000 sq ft)
- Property Tax: ₹5,000-15,000 per year
- Repairs & Renovations: AC, painting, plumbing - adds up to lakhs
- Society Fees: Monthly maintenance, water, security
- Opportunity Cost: Down payment could earn 12% in mutual funds
Hidden Costs of Renting
- Rent Increases: 5-10% every year, compounds over time
- Broker Fee: 1 month rent every time you move (₹20,000-30,000)
- Security Deposit: Locked 3-6 months rent (opportunity cost)
- No Ownership: You're building landlord's wealth, not yours
- Instability: May have to move if owner sells or increases rent
What is Breakeven Point?
The breakeven point is the year when the total cost of buying equals the total cost of renting (after accounting for property appreciation, investment returns, and tax benefits). If you plan to stay beyond the breakeven year, buying is financially better. If you may leave before breakeven, renting is smarter.
Tax Benefits of Home Loan
- Section 80C: Up to ₹1.5 lakh on principal repayment
- Section 24: Up to ₹2 lakh on interest for self-occupied property
- Tax Savings: Can save ₹1 lakh+ per year in 30% tax bracket
- First-Time Buyer: Additional ₹50,000 deduction under Section 80EEA
Should You Rent Forever and Invest?
This is a valid strategy! If you rent and invest the down payment + EMI difference in equity mutual funds (12-15% returns), you can build more wealth than buying a house. Real estate in India typically appreciates at 6-8% (lower than equities). However, you miss out on forced savings, leverage, and emotional satisfaction of ownership.
When Does Buying Make Sense?
- You plan to stay in the same city for 10+ years
- You have stable job and income
- You have 6 months emergency fund saved
- EMI is less than 40% of your monthly income
- Property prices are reasonable (not in a bubble)
- You value stability and ownership over flexibility
Realistic Property Appreciation Rates
Don't assume 10-15% appreciation! Realistic rates:
- Tier 1 Cities: 5-8% per year (Bangalore, Mumbai, Delhi NCR)
- Tier 2 Cities: 4-6% per year (Pune, Hyderabad, Chennai)
- Developing Areas: Can be higher (10%+) or negative
- Ready Property: Lower appreciation than under-construction
Frequently Asked Questions
1. Is it better to rent or buy a house in India?
It depends on your situation. If you plan to stay in the same city for 10+ years and have stable income, buying is usually better. If you may relocate in 3-5 years or want flexibility, renting is smarter. Use the calculator above to compare your specific scenario.
2. When does buying a house make financial sense?
Buying makes sense when: (1) You'll stay 10+ years, (2) EMI is under 40% of income, (3) You have 6 months emergency fund, (4) Property prices are reasonable, (5) You value ownership over liquidity. The breakeven is typically 7-12 years.
3. Is renting forever and investing a good strategy?
Yes, it can be! If you rent and invest the down payment + EMI difference in equity mutual funds (12%+ returns), you can build more wealth than buying. However, you need discipline to actually invest, and you miss out on forced savings and leverage that home loans provide.
4. What if my property doesn't appreciate?
This is a real risk! Many properties have shown zero or negative appreciation in the last 5-10 years. Don't bank on high appreciation. Focus on: location (tier 1 city), infrastructure development, ready possession, and buy for use not investment.
5. My EMI is ₹40K but rent is ₹30K - should I buy?
Not so fast! EMI isn't the only cost. Add maintenance (₹3K), property tax (₹1K), repairs (₹2K) = ₹46K total. Plus, you lock ₹10-15L in down payment. That ₹10K difference (₹46K - ₹30K rent) invested at 12% = ₹23 lakhs in 10 years. Use the calculator to see full picture.
6. Can I afford to buy a house?
Rule of thumb: Your home loan EMI should be less than 40% of your monthly income. If you earn ₹1 lakh/month, EMI should be under ₹40K. Also ensure you have: 20% down payment saved, 6 months emergency fund, and can afford maintenance costs.
7. What is the typical breakeven period for real estate?
In India, the breakeven period is typically 7-12 years depending on: property prices, rent levels, loan interest rate, property appreciation, and your tax bracket. Metro cities with high property prices have longer breakeven (10-15 years).
8. Should I buy property for rental income?
Rental yields in India are poor (2-3% in metros). You can get 7-8% from FDs with zero hassle. Unless you buy in developing areas with high appreciation potential, buying for rental income is not attractive. Focus on buying for self-use.
9. What if I have to relocate after buying?
You can: (1) Rent it out (low rental yields, maintenance headaches), (2) Sell it (pay 20% LTCG tax if held less than 2 years, pay broker fees 1-2%), or (3) Keep it locked (waste of money). This is why buying only makes sense if you're sure you'll stay long-term.
10. How much should I save for down payment?
Banks typically finance 80% of property value, so you need 20% down payment. For a ₹50 lakh property: ₹10 lakh down payment + ₹2.5 lakh stamp duty + ₹50K registration = ₹12.5 lakh total upfront. Save this amount before you start property hunting.