Rent vs Buy Calculator
Should you rent or buy a home? Compare total costs, equity, and investment returns over any timeline.
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๐ What is the Rent vs Buy Calculator?
Renting versus buying is one of the most consequential financial decisions most people make, and the right answer depends heavily on local price-to-rent ratios, how long you plan to stay, and what your money would otherwise earn if invested instead of tied up in a down payment. This calculator models both paths with your actual numbers rather than a generic rule of thumb.
โ๏ธ How Rent vs Buy is calculated
The buying scenario
This model calculates your EMI from the loan amount and rate, adds ongoing maintenance costs, and tracks how home equity builds as you pay down the loan while the property itself appreciates over time.
The renting scenario and the often-overlooked opportunity cost
The rent comparison also tracks what the down payment and the monthly EMI-minus-rent difference would grow to if invested instead, since a renter is not locking that capital into a single illiquid asset.
Why this comparison is more nuanced than either side's common talking points
Renting is not simply throwing money away, since buying also involves real ongoing costs that build no wealth. Buying is not always better long-term either, since it ignores the genuine opportunity cost of capital tied up in a down payment.
Net buy position
Net Buy = Property Value + Equity Built โ Total Cost of Buying
Compared directly against the renter's invested-savings balance
๐งฎ Worked examples
Example โ favourable for buying
A market with modest property appreciation (6โ7%/year) and rent that is a high percentage of an equivalent EMI, held for 10+ years.
โ Buying tends to build more net wealth, since equity and appreciation compound over a longer holding period that absorbs the upfront transaction costs
Example โ favourable for renting and investing
A market with low rental yield relative to property price and a shorter expected holding period (3โ5 years).
โ Renting and investing the difference often outperforms buying, since transaction costs and a shorter appreciation runway favour liquidity and flexibility
๐ก Original insights & how to use this calculator
Why holding period is usually the single biggest variable
Transaction costs are front-loaded when buying, meaning a short holding period rarely allows enough time for appreciation and equity-building to offset them.
Why your assumed investment return matters as much as your assumed property appreciation
If you assume renters invest the difference at a realistic equity return (10โ12%) rather than letting it sit idle, the renting scenario becomes considerably more competitive.
Factoring in non-financial considerations
This calculator only models the financial comparison โ stability and not being subject to a landlord's decisions are real non-financial factors that may reasonably tip a decision even when the pure numbers favour the other option.
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๐ก Expert tips
Break-even is typically 7โ10 years in Indian metros.
Property appreciation rate matters more than EMI in the long run.
Factor in maintenance (1โ2% p.a.) which most calculators ignore.
๐ Learn more on WellFiLab
Visit โโ Common questions
Is it better to rent or buy in India?
Depends on your city, timeline, and investment returns. Use this calculator โ there is no universal answer.
What is a good property appreciation rate?
Historical metro average is 5โ8% p.a. Tier-2 cities vary widely.
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