How this calculator works
Buying a home builds equity but ties up a large down payment and adds stamp duty, interest and upkeep. Renting keeps that money free to invest. The fair test is your net worth after the same number of years.
In this model, whichever path costs less each month invests the difference at your chosen return, so the comparison is like for like.
Formula
Worked example
For a ₹1.2 crore flat renting at ₹35,000, with 20% down, 7% stamp duty, an 8.5% loan and 5% price growth, the renter who invests at 10% is ahead after 15 years. At a lower investment return or faster price growth, buying wins.
Things to watch
- Rent yields in Indian metros are often 2–3%, far below loan rates, which favours renting on pure numbers.
- Add selling costs and brokerage if you plan to sell; this model does not deduct them.
- Buying makes more sense when you will stay 10+ years and value stability.
Questions
What is a good rent-to-price ratio for buying?
When yearly rent is above 4–5% of the price, buying looks better on numbers. Most Indian metros are far below that.
Does this include tax benefits?
No. Old-regime interest and principal deductions help buyers; reduce the loan rate a little to reflect them.
What return should I assume?
A realistic long-term post-tax return for a diversified portfolio, not a recent best year.
Why does the renter invest the down payment?
Because that money would otherwise have gone into the house. Leaving it idle would make the comparison unfair.
For planning and education only, not tax, legal or investment advice. Last reviewed 2026-10-31.