Rent vs buy: compare wealth, not EMI vs rent
Buyer builds equity + appreciation; renter invests the down payment + monthly savings. Higher wealth at your horizon wins.
Monthly EMI
₹57,582
Down payment ₹16.0 L
Break-even year
Beyond horizon
Renting wins across your horizon
At year 10
Renting wins
by ₹12.7 L
Year-by-year wealth
| Year | Buy wealth | Rent wealth |
|---|---|---|
| Year 1 | ₹22.0 L | ₹22.7 L |
| Year 2 | ₹28.4 L | ₹30.0 L |
| Year 3 | ₹35.2 L | ₹37.8 L |
| Year 4 | ₹42.5 L | ₹46.1 L |
| Year 5 | ₹50.3 L | ₹55.0 L |
| Year 6 | ₹58.6 L | ₹64.6 L |
| Year 7 | ₹67.4 L | ₹75.0 L |
| Year 8 | ₹76.9 L | ₹86.0 L |
| Year 9 | ₹87.0 L | ₹97.8 L |
| Year 10 | ₹97.8 L | ₹1.11 Cr |
Simplified model: ignores tax effects, transaction costs and rent-deposit opportunity. Estimates only — verify loan terms with your lender.
Stuck between two flats or a buy-vs-rent call? Ask in your language — free.
Ask SahayakWorked example: ₹60 lakh flat that rents for ₹18,000 a month
- Rental yield = ₹2,16,000 ÷ ₹60,00,000 = 3.6% a year.
- Buying with ₹12 lakh down and a ₹48 lakh loan at 8.5% for 20 years means an EMI of about ₹41,650 — more than double the rent.
- If you rent and invest the ₹12 lakh plus the ₹23,650 monthly difference, renting can build more wealth unless property prices rise faster than about 6–7% a year.
How the Rent vs buy calculator works: the rules
- Compare total wealth after 10–20 years, not just rent versus EMI.
- Under the old regime, home loan interest up to ₹2 lakh (self-occupied) and principal under the 80C limit can be deducted.
- Buying costs include stamp duty (often 5–7%), registration, maintenance and property tax.
The rental yield test
Rental yield is the yearly rent divided by the price of the home. In most big Indian cities, yields for flats are around 2–4% a year, while home loans cost 8–9%. That means renting is often cheaper month to month, and buying makes sense mainly if you'll stay long enough for price growth and loan repayment to build wealth, or if you value stability.
A quick rule: if the property price is more than about 25–30 times the yearly rent, renting and investing the difference usually looks better on paper. If it's closer to 15–20 times, buying gets more attractive.
Costs people forget when buying
Add stamp duty and registration (often 5–8% of the price), brokerage, interiors, society maintenance and property tax. You also lose the return the down payment could have earned. On the other side, home loan interest and principal get tax deductions under the old regime, and the EMI stays fixed while rents usually rise 5–10% a year.
When buying usually wins
You plan to stay in the same city for 8–10 years or more, your job is stable, you have an emergency fund after the down payment, and the EMI is no more than about 40% of take-home pay. If you might move cities, or the EMI would stretch you, renting keeps you flexible.
A worked comparison over 10 years
Take a ₹60 lakh flat that rents for ₹18,000 a month. Buying with ₹12 lakh down and a ₹48 lakh loan at 8.5% for 20 years means an EMI of about ₹41,700. Renting the same flat costs ₹18,000 a month, rising about 5% a year. If the renter invests the ₹12 lakh down payment and the monthly difference between EMI and rent, that money can grow significantly over 10 years.
Whether buying wins depends on how fast the flat's price grows. If it rises around 6–7% a year, buying and renting can come out close over 10 years once stamp duty, maintenance and interest are counted. Faster price growth favours buying; slower growth or higher interest rates favour renting. Change these numbers in the calculator to see your own break-even.
The non-money side
Owning gives stability — no forced moves, freedom to renovate, and a house that's paid off by retirement. Renting gives flexibility — easier job changes, no maintenance burden, and the chance to live in a better location than you could afford to buy. Many people rent while their career is moving and buy once they've settled in a city.
Checks before you buy instead of renting
Confirm the project is registered with your state's RERA authority and check its completion record on the RERA website. Get the title, encumbrance certificate and approved building plan checked by a lawyer. Prefer ready-to-move homes if you're paying rent at the same time, because a delayed under-construction project means paying both EMI and rent. Keep at least six months of EMIs as an emergency fund after the down payment, so a job loss doesn't force a distress sale.
If you're not ready to buy yet, you can still prepare: build the down payment in a safe investment, keep your credit score above 750 for a better loan rate, and track prices in the areas you like for a year before deciding.
Typical gross rental yields (indicative)
| City | Typical yield | Price ÷ yearly rent |
|---|---|---|
| Mumbai | 2.5–3.5% | 28–40× |
| Delhi NCR | 2.5–3.5% | 28–40× |
| Bengaluru | 3–4% | 25–33× |
| Hyderabad | 3–4% | 25–33× |
| Pune | 3–4% | 25–33× |
| Chennai | 2.5–3.5% | 28–40× |
| Kolkata | 2.5–3.5% | 28–40× |
| Ahmedabad | 2.5–3.5% | 28–40× |
Indicative ranges for residential flats; varies by locality and building age.
Rent vs buy calculator: frequently asked questions
Is it better to rent or buy a house in India?
It depends on rental yield, interest rates, how long you will stay and expected price growth. In big cities with low rental yields, renting often makes financial sense.
What is rental yield?
Yearly rent divided by the property price. Indian cities usually have 2–4% yields.
Does home loan tax benefit change the answer?
It helps under the old regime, but usually does not close the gap fully.
What hidden costs come with buying?
Stamp duty, registration, brokerage, maintenance, property tax and repairs.
When does buying make sense?
When you will stay 10+ years, EMI is close to rent, and you value stability.
What about the new tax regime?
There is no deduction for self-occupied home loan interest under the new regime.
Official sources: Income Tax Department· Last reviewed 2026-10-30. Results are estimates — confirm final figures with your lender, insurer or tax adviser.