What is a Rent vs Buy Calculator?
Buying a home ties up money in a down payment and EMIs, while renting keeps that money free to invest. Which leaves you better off depends on prices, rents, rates and returns.
This calculator compares your net worth after a chosen period if you buy with a home loan versus rent a similar home and invest the difference.
How it helps you
- See the financial side of a big decision in one number.
- Test how home price growth and investment returns change the answer.
- Understand the full cost of buying, including upfront costs.
How it is calculated
Buy = Home value − Loan outstanding + Buyer's investments; Rent = Renter's investments
- Home value
- Purchase price grown at the expected price growth
- Loan outstanding
- Balance left on the home loan at the end
- Renter's investments
- Down payment and upfront costs invested, plus the monthly difference between EMI and rent
Each month, whoever spends less invests the difference at the expected return.
A ₹80 lakh home with 20% down, 7% upfront costs and a 20-year loan at 8.5%, versus ₹25,000 rent rising 5% a year. Home prices grow 5% and investments earn 10%, compared over 15 years.
- 1EMI ≈ ₹55,541 a month
- 2Buyer's net worth after 15 years ≈ ₹1,39,24,307
- 3Renter's net worth after 15 years ≈ ₹1,79,95,679
On these assumptions renting and investing comes out ahead, but small changes in price growth or returns can reverse this.
How to use the Rent vs Buy Calculator
- 1Enter the home price, down payment and upfront costs.
- 2Enter the loan rate and tenure.
- 3Enter the rent for a similar home and how fast it rises.
- 4Set home price growth, investment return and the period to compare.
Frequently asked questions
Is renting always better financially?
No. If home prices grow faster, rents are high relative to prices, or the renter does not invest the difference, buying can come out ahead.
What does the calculator leave out?
Maintenance, property tax, home-loan tax benefits, selling costs and the emotional value of owning a home.
Why does the renter invest the down payment?
To compare fairly, the renter keeps the money the buyer spent upfront and invests it.