Home Loan vs Rent Calculator

Should you buy a home or keep renting? Month-by-month simulation comparing net wealth under both scenarios over the full loan tenure.

🏠 Buying Details

₹
10L5Cr
%
5%= ₹16.00 L50%
yr
5 yryears30 yr
%
6%p.a.15%
%
0%p.a.20%

🏢 Renting Details

₹
5Kper month3L
%
0%p.a.20%
%
4%on down-payment20%

Buy vs Rent in India — A Complete Financial Guide

The "should I buy or rent a home?" question is one of the most consequential financial decisions for Indian families. With property prices in metros like Mumbai, Bengaluru, and Delhi NCR often touching ₹1–3 crore for a 2BHK, the stakes are enormous. This calculator simulates both scenarios month-by-month to give you an accurate comparison.

How This Calculator Works

The calculator runs a month-by-month simulation over the full loan tenure:

  • Buy scenario: You pay a down payment, take a home loan, and pay EMIs. Property appreciates monthly. Net wealth = Property Value − Remaining Loan Balance.
  • Rent scenario: You invest the down payment in equity mutual funds from day 1. You pay rent (which increases annually). If EMI > Rent, you invest that surplus every month. Net wealth = Investment portfolio value.

Key Factors That Influence the Decision

Factors favouring BUYING

  • ✅ Long planned stay (7+ years in same city)
  • ✅ Low price-to-annual-rent ratio (<20)
  • ✅ High property appreciation expectations
  • ✅ Emotional security and stability
  • ✅ Tax benefits on home loan (Section 24b)
  • ✅ Protection against future rent hikes

Factors favouring RENTING

  • ✅ Short/uncertain stay duration
  • ✅ High price-to-annual-rent ratio (>30)
  • ✅ Strong equity market expected returns
  • ✅ Career flexibility and mobility needs
  • ✅ Low rental yield in target area
  • ✅ High stamp duty + registration costs upfront

The Price-to-Rent Ratio in Indian Cities

Divide the property price by the annual rent for a similar property. Above 20 generally favours renting; below 15 generally favours buying.

CityTypical P/R RatioVerdict
Mumbai (South/Bandra)35–45Strong Rent
Bengaluru25–35Lean Rent
Delhi NCR20–30Neutral
Pune18–25Neutral
Hyderabad20–28Neutral
Chennai15–22Lean Buy
Tier-2 cities10–18Buy favourable

Costs This Calculator Doesn't Include

To get the complete picture, add these one-time and recurring costs to the buy scenario:
• Stamp duty & registration: 5–8% of property value (paid upfront)
• GST: 5% on under-construction properties
• Interior & furnishing: ₹5–20 lakh typically
• Maintenance: ~1% of property value per year
• Property tax: varies by city (0.1–0.5% p.a.)

Frequently Asked Questions

Not necessarily. Buying a home makes financial sense when you plan to stay in the same city for 7+ years, property prices are reasonable relative to rents (price-to-rent ratio below 20), and you can afford the EMI without straining your budget. In metro cities like Mumbai or Bengaluru where property prices are very high but rents are comparatively lower, renting and investing the difference often yields better returns over 10–15 years.
Generally, buying makes financial sense only if you plan to stay in the same city for at least 7–10 years. In the first few years, the high cost of stamp duty, registration, and interest-heavy EMIs means you're building very little equity. The longer you hold, the more property appreciation and principal repayment work in your favour.
This calculator uses a simplified model. Costs not included: property maintenance and repair (~1% of property value/year), property tax, home insurance, stamp duty and registration (5-8% of property value, paid upfront), society charges, interior costs, and tax benefits on home loan interest (Section 24b: up to ₹2L deduction).
Yes, the opportunity cost of the down payment is crucial. This calculator accounts for it by comparing your net wealth (property value minus remaining loan) against investing that down payment in the market at your specified investment return rate.
Rental yield is the annual rent as a percentage of property value. In India, it typically ranges from 2-4%. When rental yield is low, renting is cheap relative to owning, making the renting option more attractive. You can calculate it as: (Monthly Rent × 12) / Property Price × 100.

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