Rent vs. Buy Calculator

Decide whether to buy a home or rent. This calculator compares the long-term wealth impact of property appreciation versus investing your down payment in financial assets.

Total cost of buying the property.

Upfront capital needed for home purchase (invested in market if renting).

Expected annual rise in real estate value.

Rental cost of a comparable house.

Annual percentage increase in rental rates.

Expected returns if down payment & savings are invested in equity/mutual funds.

How long you plan to stay in the home.

How it works

Buying builds home equity through appreciation but involves high upfront down payments, interest, and maintenance costs. Renting involves recurring rental outflow, but leaves your down payment free to compound in mutual funds or equities.

Formula

Cost_Buy = Home Purchase Price + Maintenance - Final Appreciated Value, Cost_Rent = Total Rent Paid - Investment Gains

Compares total unrecoverable costs of buying (maintenance, taxes, interest) against total rent paid minus the opportunity growth of down payment capital.

SymbolVariableUnitDescription
P_homeHome purchase price₹
P_finalAppreciated home value at horizon₹
MaintMaintenance & property taxes (1.5%/yr)₹
Gain_investCompounded investment returns on down payment₹

Worked example

₹60 Lakh property vs ₹20,000 rent over 10 years

Home Price:
₹60,00,000
Down Payment:
₹12,00,000
Appreciation:
5% p.a.
Rent:
₹20,00,000/mo (6% inflation)
Invest Return:
10% p.a.
Horizon:
10 years

Total rent paid across 10 years = ₹31.64 Lakhs. Investing ₹12 Lakh down payment at 10% generates ₹19.12 Lakh in profit, making net renting cost ₹12.52 Lakhs. Buying creates a property worth ₹97.73 Lakhs against costs of ₹69 Lakhs. The model weighs both to give a clear verdict.

Limitations

Emotional comfort of owning a home and landlord flexibility are qualitative factors not captured in pure financial math.

Frequently asked questions

What is the price-to-rent ratio?

The price-to-rent ratio equals Home Price divided by Annual Rent. A ratio below 15 generally favors buying, between 16 and 20 is neutral, and above 20 strongly favors renting.

Does this include home loan tax benefits?

In India, Section 24(b) provides deductions up to ₹2 Lakh on home loan interest in the Old Tax Regime. In the New Tax Regime, this deduction is not available for self-occupied property.

How long should I plan to stay in a city before buying?

Because property transactions incur 6-8% in stamp duty, registration, and brokerage charges, financial experts generally advise buying only if you plan to stay in the home for at least 7 to 10 years.

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Last reviewed: 2026-08-22.