Rent vs Buy Calculator
Compare buying a home with a loan against renting and investing the difference, using growth rates you enter.
Buying
Renting
How it works
Both start with the same cash: down payment D plus buying costs K. The loan is L = price − D, with a reducing-balance EMI.
Each month m, rent is today's rent × (1 + rent increase)completed years, and the renter's investments become:
Balance = (Balance + EMIm − Rentm) × (1 + i), with i = return ÷ 12
(EMIm is 0 once the loan is repaid; the renter starts with D + K invested.) After the chosen number of years Y:
Buyer's net worth = Price × (1 + price growth)Y − Loan still owed
Renter's net worth = Balance
Worked example
A simple case you can check by hand: a ₹12,00,000 home bought fully in cash with no price growth, against paying ₹10,000 a month in rent and investing the ₹12,00,000 at 12% a year, for 1 year.
- Buyer's net worth = ₹12,00,000 (the home, no loan)
- Renter: ₹12,00,000 × 1.0112 = ₹13,52,190.04, minus rent of ₹10,000 at the start of each month, which would have grown to ₹10,000 × 12.809328 = ₹1,28,093.28
- Renter's net worth = ₹12,24,096.76, so renting is ahead by ₹24,096.76 in this case
- With the default inputs above (a loan, rising rent and prices), the result is: Renting ends ahead by ₹13,28,647.
Frequently asked questions
How does this rent vs buy calculator compare the two?
It gives both households the same money. The buyer spends the down payment and buying costs, then pays the EMI. The renter invests that same starting money and, each month, invests the difference between the EMI and the rent. At the end it compares the buyer's home value minus any loan left with the renter's investments.
Which rates do I need to enter?
Four: your loan rate, how fast you expect rent to rise, how fast you expect the home's price to rise, and the return the renter could earn on investments. All four are your assumptions, and the answer is sensitive to them, so try a few combinations.
What are buying costs?
One-time costs of buying, such as stamp duty, registration, brokerage and legal fees. They vary by state and property, so enter your own estimate; the calculator does not assume any rate.
What does it leave out?
Maintenance, property tax, home insurance, repairs, any tax benefits on the home loan, and the costs of selling the home later. If these matter for you, they usually make buying a little less attractive; adjust your inputs to reflect them.
What if rent becomes higher than the EMI?
Then the renter has to spend more each month than the buyer, and the difference comes out of the renter's investments. This often happens after the loan is fully repaid, when the buyer pays no EMI at all.
Is buying always better in the long run?
Not always. It depends on how fast home prices and rents rise, the loan rate, and what the renter's investments earn. Owning also brings things this calculator cannot measure, such as stability and control over your home.
Why is the comparison period separate from the loan tenure?
You may want to know which is better over, say, 10 years even if the loan runs for 20. The calculator stops at your chosen period and counts any loan still unpaid against the buyer.
About these results
- Method and timing
- Monthly: the buyer pays a reducing-balance EMI; the renter pays rent (rising once a year) and invests the difference at the start of the month at the return ÷ 12. Home price grows yearly. Maintenance, taxes and selling costs are left out.
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This is a simplified comparison for information only, not financial advice. Every growth rate and return is your assumption, several real costs are left out, and actual outcomes can differ widely.