🏠Rent vs Buy Calculator
Compare the costs of renting vs buying a home. Find out which option is better for your financial situation.
Buying Details
Renting Details
Economic Assumptions
Rent vs. Buy Calculator – Indian Real Estate Decisions
Compare the cost of renting a flat versus buying one in India. This tool handles Indian home loan interest rates, PMAY subsidies, and factors like maintenance and property appreciation to help you decide between paying rent or an EMI.
Expert Guidelines
Low Rental Yields in Indian Cities
In Indian metros like Mumbai, Delhi, or Bengaluru, the 'Rental Yield' is often as low as 2-3%. Conversely, home loan interest rates are typically 8-9%. This means renting is often mathematically cheaper than buying in India. Our calculator helps you see this gap clearly, allowing you to weigh the financial cost of renting against the 'emotional' and social security of owning a home in India.
Reserve Bank of India (RBI) – Housing Data
Tax Benefits of Home Loans (Section 24 & 80C)
The Indian government provides significant tax deductions for home buyers. Under Section 24, you can deduct up to ₹2 lakh of interest, and Section 80C allows a deduction for principal repayment. For high-income earners in India, these tax savings can effectively reduce the 'real' EMI cost by 20-30%. Our tool includes these Indian tax breaks to show the 'net' cost of buying versus renting.
Income Tax Department of India
Pradhan Mantri Awas Yojana (PMAY) Benefits
For first-time home buyers in India, the PMAY can provide a subsidy of up to ₹2.67 lakh on home loans. While the scheme's deadlines change, it has significantly influenced the affordability of buying 'budget' homes. Use this calculator to see how a one-time government subsidy improves your buy-vs-rent math in the Indian affordable housing segment.
Ministry of Housing and Urban Affairs
Frequently Asked Questions
Is real estate appreciation high in India?
Real estate appreciation in India varies by micro-market. While some areas see 10%+ growth, others have stagnated for a decade. The NHB (National Housing Bank) tracks the Residex to monitor these trends. Our calculator lets you input your expected annual growth to see if the property appreciation in your specific Indian city makes buying a better long-term wealth builder than renting.
How much are the maintenance and 'Society' charges?
In Indian apartment complexes, 'Society Maintenance' can be a recurring ₹3,000 to ₹15,000 per month. Renters often pay this as part of the rent, but for owners, it is a separate outflow. This tool ensures you account for these monthly Indian housing expenses, which often go up by 5-10% every year, impacting the buy-vs-rent calculation.
What are the registration and stamp duty costs in India?
Buying a property in India involves 5-7% of the value in Stamp Duty and Registration fees, which varies by state. This is a non-recoverable 'sunk cost.' Our calculator adds these fees to your initial down payment, showing you exactly how many years of 'renting' it takes to recover these heavy Indian entry costs.
How to Use This Rent vs Buy Calculator
Our rent vs buy calculator goes beyond a simple monthly cost comparison. It projects your net worth in both scenarios over time, accounting for all the hidden costs of ownership and the power of alternative investments.
What This Calculator Accounts For:
- Purchase costs (down payment, closing costs, fees)
- Monthly costs (mortgage, HOA, taxes, maintenance)
- Opportunity cost (down payment invested vs tied up)
- Home appreciation and rent inflation
- Selling costs (commission, taxes)
The 5% Rule (Price-to-Rent Ratio)
A quick way to evaluate whether renting or buying is better: multiply the home price by 5% and divide by 12. If rent is LOWER than that amount, renting is probably better. If it's HIGHER, buying may make sense.
Example:
$500,000 home × 5% ÷ 12 = $2,083/month. If you can rent an equivalent home for less than $2,083/month, renting is probably financially better.
Note: This is a simplified rule. The calculator above does a much more detailed analysis considering your specific situation.
Hidden Costs of Homeownership
"Rent is throwing money away" is a common myth. The truth is buying also has many costs that don't build equity:
Upfront Costs (3-7% of value)
- Stamp duty/transfer tax (1-4%)
- Closing costs and legal fees
- Appraisal and inspection
Recurring Costs
- Property tax (0.5-2%/year)
- Maintenance (1-2%/year)
- Home insurance
- HOA fees (if applicable)
On a 30-year mortgage, you may pay more in INTEREST than the original home value. In many cases, the disciplined renter who invests the difference ends up with MORE wealth than the homeowner.
When Buying Makes Sense
✓ Consider Buying If:
- You plan to stay 7+ years in the same location
- You can put 20% or more down
- Equivalent rent is high vs home price
- Interest rates are low
- Local market has good prospects
✓ Consider Renting If:
- You may need to relocate soon
- Price-to-rent ratio is very high
- Interest rates are high
- You don't have enough for a down payment
- You want flexibility and fewer responsibilities
Frequently Asked Questions
Why does the calculator say renting is better when everyone says to buy?
Conventional wisdom ignores opportunity cost - the money you could make by investing your down payment and monthly difference. In many markets, especially in major cities, the math favors renting. The outcome depends heavily on local prices, interest rates, and how long you plan to stay.
But rent doesn't build equity!
Correct, but the money you save renting CAN build equity - through investments. If you invest $100,000 down payment + $1,500/month difference at 8% annually for 20 years, you'll have over $1 million. Buying a home isn't the only way to build wealth.
What if home prices rise a lot?
The calculator lets you adjust the appreciation rate. But remember: historically, real estate appreciates about 3-5% annually (similar to inflation), while the stock market returns 7-10%. Also, when home prices rise, rents rise too - maintaining the ratio. Periods of exceptional appreciation are hard to predict and shouldn't be the basis for your decision.
Financial Accuracy
Disclaimer: This calculator provides estimates for informational purposes only. This is not financial, tax, or legal advice. Please consult a qualified financial advisor for advice specific to your situation.