What is the Rent vs Buy?
The rent-versus-buy question is not about rent being "wasted money". Buying carries its own unrecoverable costs: loan interest, stamp duty and registration (7–9% upfront), maintenance and property tax. Rent is simply a different unrecoverable cost.
The fair comparison puts the down payment and the EMI-minus-rent difference into investments in the renting scenario, then compares total wealth at the end.
Formula & worked example
Renting wealth = (Down payment + monthly savings) compounded at investment return
Worked example: a ₹90 lakh home with ₹20 lakh down at 8.6% gives an EMI of about ₹61,200. Over 10 years, after interest, acquisition costs and upkeep, buying leaves you about ₹47.8 lakh of net wealth. Renting at ₹28,000 (rising 5% a year) costs ₹42.3 lakh in rent over the same decade, but investing the down payment and the monthly difference at 12% builds about ₹1.30 crore — so on these assumptions renting is ahead by roughly ₹81.7 lakh. Change the investment return or the property appreciation by a couple of points and the answer flips, which is why you should run your own numbers rather than trust a rule of thumb.
How to use this rent vs buy calculator
- Enter the property price and your down payment.
- Set years you will realistically stay — this is the most important input.
- Enter rent for a genuinely comparable home, not a cheaper one.
- Be conservative on appreciation and realistic on investment returns.
Smart tips
- Time horizon decides it. Under 5 years, renting almost always wins because acquisition costs never amortise.
- Indian rental yields of 2–3% mean rent is often far cheaper than the EMI on the same property.
- Buying has real non-financial value: stability, freedom to modify, and no landlord risk. Those are worth something.
- Include stamp duty, registration, brokerage and interiors — typically 8–12% of price, paid on day one.
- The renting case only works if you genuinely invest the difference. Most people spend it.
Frequently asked questions
Is it better to rent or buy in India?
Under about 5–7 years, renting usually wins because of high transaction costs. Beyond 10 years, buying tends to win, especially with strong appreciation.
Why is renting sometimes cheaper than an EMI?
Indian rental yields are only 2–3% of property value, while home loans cost 8–9%. The gap means rent is often well below the EMI on the same home.
Does this include tax benefits?
No. Home loan interest deduction under Section 24 (up to ₹2 lakh) and principal under 80C improve the buying case in the old tax regime.
What if property prices fall?
Then buying can produce a loss, especially with leverage. Try 2–3% appreciation to stress-test the decision before committing.
Want the theory behind the numbers? Read our rent vs buy on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 30 Sep 2026. How we check these numbers.