Rent vs Buy Calculator for India

Making the decision to rent or buy a house is a significant financial choice that requires careful consideration. RentVsBuyIndia.com is designed to help you to navigate this complex decision by providing a comprehensive analysis of both options, renting or buying.

Jump to the Calculator ➤

This detailed calculator allows you to input key financial parameters such as property purchase value, loan percentage, interest rates, maintenance costs, property tax, home insurance, and expected appreciation rates. It calculates your monthly home loan installment (EMI) and provides a detailed breakdown of costs associated with both renting and buying over time.

Key features of the Rent vs Buy Calculator include:

Dynamic Calculations: Instantly see how changes in property value, loan terms, and interest rates affect your financial outcomes.
Yearly Breakdown: Access a detailed table that outlines yearly calculations, including total costs, home equity, and investment growth, allowing you to visualize your financial journey.
Detailed Financial Breakdown: See a detailed breakdown of the costs associated with both renting and buying, including EMI, maintenance, property tax, home insurance, and expected appreciation.
Graphical Representation: View a graph that illustrates the value of your investment over time, comparing home equity, property value, and investment returns.
Comprehensive FAQs: Get answers to common questions about renting vs buying, property appreciation, and investment returns, helping you make informed decisions.
CSV Download: Easily download your results in CSV format for further analysis or record-keeping.

If you still have questions, you will find a section dedicated to frequently asked questions.

We also have a few other tools that allow you to gain a better understanding of your individual financial situation:

We hope that this calculator helps you make an informed decision about whether to rent or to buy, and we wish you the best of luck in your housing decisions!

1. Property Purchase Details

Total Purchase Cost (include all expenses)

Include registration, stamp duty and all other costs

Loan amount (as a %)

Maximum is typically 80% of the purchase value

Home Loan Amount

Loan Tenure (in Years)

Maximum is typically 30 years

Home Loan Rate of Interest (%)

Usually between 8.5-17%

Monthly Home Loan Instalment (EMI)

Expected Annual Appreciation Property Value (%)

Usually between 5-10%, but varies by location

Property Maintenance Cost (Monthly)

Include all annual maintenance costs, and divide by 12.

Annual growth in Maintenance Cost (%)

Usually between 3-5% (depends on the property, and general inflation)

Annual Property Tax

Calculation varies by location and city. Check with your local municipal corporation

Annual Home Insurance Cost

Check with your insurance provider

2. Rental Payment Details

Monthly Rent

Total rent including all expenses

Expected Annual Increase in Rent(%)

Usually between 5-10%

Security Deposit to the Owner

This is a one-time payment to the owner at the time of signing the lease

Initial Expenses

Any expenses incurred at the time of signing the lease, including broker fees, moving costs, etc.

3. Investment Details

Expected return Investments(%)

This is the expected return (in %) on the money saved by renting instead of buying (EMI-Rent)

How To Use This Rent Vs Buy Calculator

This rent vs buy calculator is a powerful tool to help you visualise your fiancial future. So, try it out with accurate estimations of the values that you expect to paying when you buy or rent. Explore the market, try different scenarios with inflation, and rent increase values at different rates, to see how the outcomes change. You may be surprised, and how a small change (even just 1-2%) can change everything! Don't fall prey to unexpected scenarios. Try them out, and find out what decision is best for you, and for the risks that you are able to take, safely.

Start by estimating the value of your desired property, the down payment that you have in hand, how much disposable income you have that's available to pay your monthly loan EMI, and how much will be remaining for other purposes (use our home loan affordability calculator to help you with that if you're not sure).

Estimate the value of your desired property, the down payment that you have in hand, how much disposable income you have that's available to pay your monthly loan EMI, and how much will be remaining for other purposes (use our home loan affordability calculator to help you with that if you're not sure).
Estimate the rental cost of the same house. Keep in mind annual rental increases, moving costs, rental deposits, maintenance costs etc. Try out different values to understand the impact of these parameters on the outcome.
Input these values in our buy vs rent calculator. Remember to take into account income tax deductions, maintenance costs and other monthly and annual expenses.
Click the "calculate" button, and look at the suggested decision in the 'results' section. The bar across the top will tell you whether it's a better decision to buy, or whether to rent, based on the various parameters that you've input. Below this you'll see some calculated figures in the Results Summary that explain how the decision was made.
For more detail, look at the "Graph", and "Detailed Table" that we have provided. You can download the values in the table in a CSV file (usable in Excel or any other spreadsheet application) by clicking the "Download Results" button below the comprehensive table.
Feel free to play around with some of the values in the calculator (especially the ones that you can't predict, such as the Expected Annual Rental Increase percentage, and the Expected Annual Property Appreciation percentage). These parameters are unexpectedly influential in changing the outcome of your decision.
Keep in mind the duration that you expect to rent (for the duration of your life), and what that would do to your investments, and asset value in the long term.
Remember that this calculator's abilities are limited based on the accuracy of the input data, so try to estimate these values as well as you can.

We hope that this calculator helps you make an informed decision about whether to rent or to buy, and we wish you the best of luck in your housing decisions!

If you have any questions, or suggestions, please contact us.

Calculation Methodology Explained

This calculator uses the following methodology to compare renting versus buying over the specified loan tenure:

1. Home Loan EMI

The Equated Monthly Installment (EMI) for the home loan is calculated using the standard formula:

EMI = [P × r × (1 + r)^n] / [(1 + r)^n – 1]

P: Principal Loan Amount (Property Value × Loan Percentage / 100)
r: Monthly Interest Rate (Annual Rate / 12 / 100)
n: Loan Tenure in Months (Years × 12)

Each year, the total principal and interest paid are calculated based on this monthly EMI.

2. Property Appreciation

The property value is assumed to appreciate annually at the 'Expected Annual Appreciation' rate. The calculation compounds monthly for better accuracy:

Monthly Appreciation Rate = Annual Rate / 12 / 100

End-of-Month Value = Start-of-Month Value × (1 + Monthly Appreciation Rate)

3. Buying Costs (Annual)

The total annual cost of buying includes:

Total EMI Paid: (Calculated Monthly EMI × 12)
Maintenance Costs: Starts with the initial monthly cost, inflated monthly using the 'Maintenance Inflation' rate.
Property Tax: The annual property tax amount entered.
Home Insurance: The annual insurance cost entered.

4. Home Equity

Your home equity is calculated at the end of each year:

Equity = Current Property Value – Remaining Loan Balance

The remaining loan balance is tracked monthly based on the principal paid as part of the EMI.

5. Renting Costs (Annual)

The total annual cost of renting is calculated based on the monthly rent. The rent increases once per year at the beginning of the year (after the first year):

New Year's Rent = Previous Year's Rent × (1 + Annual Rent Increment Rate / 100)

6. Opportunity Cost (Investment Growth)

This is a key part of the comparison. We assume that the money saved by renting instead of buying is invested each month and grows at the 'Expected Return on Investment' rate.

Initial Investment: Down Payment - Security Deposit. This amount starts growing immediately.
Monthly Investment/Withdrawal:
- Calculate Monthly Buying Cost = (Monthly EMI + Inflated Monthly Maintenance + Monthly Property Tax + Monthly Insurance)
- Calculate Monthly Savings/Deficit = Monthly Buying Cost - Current Monthly Rent
- If positive (renting saves money), this amount is added to the investment balance monthly.
- If negative (renting costs more), this amount is effectively withdrawn from the investment balance monthly.
Investment Growth: The total investment balance grows monthly at the 'Expected Return' rate (converted to a monthly rate).

End-of-Month Investment Value = (Start-of-Month Value + Monthly Savings/Deficit) × (1 + Monthly Expected Return Rate)

7. The Comparison

At the end of the loan tenure, the calculator compares:

Final Home Equity (Buying Scenario)
Final Investment Value (Renting Scenario)

The option resulting in a higher net value is recommended. The difference between these two final values indicates the financial advantage of one option over the other over the specified period.

Frequently Asked Questions

How does the Rent vs Buy calculator work?

The calculator compares the total cost of buying a house (including EMIs, maintenance, and property taxes) with the total cost of renting (including rent payments and potential investment returns from the money saved). It factors in property appreciation, rental increases, and investment returns to give you a comprehensive financial comparison over your specified time period.

Who should use a rent vs buy calculator?

How does a rent vs buy calculator help in decision-making?

A rent vs buy calculator simplifies the decision-making process. It breaks down costs into clear categories, such as upfront expenses, recurring payments, and long-term factors like equity growth across the span of a defined period of time.

It helps users compare renting and buying based on their budget, lifestyle, and financial goals. Of course, buying and renting have specific purposes and benefits, and it is for the user to decide which one is better for them. These calculators are only tools meant to help you make an informed decision.

What factors should I consider when deciding between renting and buying?

Consider these key factors:

Your expected length of stay in the property
Current property prices and rental rates in your area
Your available down payment
Current home loan interest rates
Expected property appreciation in your area
Potential investment returns on saved money
Property maintenance costs and taxes
Your job stability and future plans
Your risk tolerance
Your investment goals
Your lifestyle and preferences
Your financial situation
Your emotional attachment to the property
Your ability to handle unexpected expenses

How do I estimate property appreciation rate?

Property appreciation rates vary by location and market conditions. Research historical price trends in your target area through property websites or local real estate agents. In India, residential properties typically appreciate by 5-10% annually in major cities, but this can vary significantly based on location, infrastructure development, and market conditions.

What is a good expected return rate for investments?

For long-term investments in the stock market in India, you can consider these typical returns:

Equity mutual funds: 12-15% (higher risk)
Balanced mutual funds: 10-12% (moderate risk)
Debt funds: 6-8% (lower risk)

Be aware that these are not guaranteed returns, and the stock market is volatile. The actual returns will depend on the performance of the stock market, and the timing of your investments.

Choose a rate based on your investment strategy and risk tolerance. A conservative estimate of 8-10% is often used for long-term planning. Remember that you will have to pay tax on the returns, and the actual returns will be lower after tax.

How accurate is the calculator's prediction?

The calculator provides estimates based on the input parameters you provide. While it considers major factors like EMIs, property appreciation, and investment returns, actual results may vary due to market conditions, policy changes, or unforeseen circumstances.

Use it as a guide for decision-making rather than as a guarantee of future outcomes.

Are tax benefits included in the calculations?

The calculator considers basic costs and returns but does not include tax benefits.

When buying a home in India, you can claim tax deductions under Section 24 (for home loan interest) and Section 80C (for principal repayment). Similarly, investment returns may have different tax implications based on your investment choices and holding period.

What are the benefits of renting a property?

Renting a property offers several benefits:

Flexibility: You can move more easily without the commitment of owning a property. This is especially useful if you're not sure how long you'll stay in an area, or city.
Lower upfront costs: You don't need a large down payment to rent. Ideal for bachelors or young couples who haven't built up much savings.
No maintenance responsibilities: The landlord is responsible for repairs and maintenance - less hassle.
Potential for lower costs: Renting can be more cost-effective than buying in some cases.
Ideal for short-term stays: If you're not sure how long you'll stay in an area, renting can be a better option.
Allows you to live in a better area: You can live in a better area, or a more convenient location, without the need to buy a property.
You can use the money saved on rent to invest in other things, or to save for a down payment on a property.
You can quickly move out of the property if you need to, without the need to sell it.
You can easily upgrade to a better property if you need to, or move to a different area.

What are the benefits of buying a property?

Buying a property offers several benefits:

Long-term investment: You own the property and can build equity over time.
Potential for appreciation: Property values can increase over time, providing a return on your investment.
Tax benefits: You can claim tax deductions for mortgage interest and property taxes.
Emotional satisfaction: Owning a home can provide a sense of security and stability.
Stable monthly payments: You know exactly how much you'll pay in rent each month, even if it is relatively high initially. The longer you rent, the more likely you are to pay more than the cost of buying the same property.
You can use the property as collateral to get a loan for other purposes.
You can sell the property if you need to, and get a return on your investment, whereas renting does not give you any return on your investment, and is purely a monthly expense.