Rent vs Buy Calculator
Compare the long-term financial cost of renting vs buying a home.
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Rent vs Buy Calculator
Use the formula and worked example below to calculate manually.
Overview
The rent vs buy calculator compares the true financial cost of renting versus buying a home over a set time horizon, factoring in mortgage payments, property appreciation, opportunity cost of the down payment, and rental inflation.
How to use this calculator
- Enter the home price, down payment, mortgage rate, and tenure.
- Enter the current monthly rent and expected annual rent inflation.
- Set the expected annual property appreciation rate.
- Enter the opportunity cost rate (what you'd earn if you invested the down payment instead).
- The calculator shows the net financial outcome of each option over your chosen time horizon.
Understanding the inputs & results
Home price
The purchase price of the property you are considering buying.
Opportunity cost
The return you forgo on the down payment by locking it into property instead of investing it.
Property appreciation
The annual rate at which the home's market value is expected to rise.
Break-even period
The number of years after which buying becomes cheaper than renting on a cumulative basis.
Rent inflation
The annual rate at which rents are expected to rise in the area.
The formula
Net cost comparison
Buy cost = EMIs + maintenance + tax − equity built up | Rent cost = Cumulative rent + opportunity cost on down payment
The calculator sums all outflows for each option over the horizon and computes the net financial position — factoring in equity appreciation and opportunity cost.
Worked example
Home price ₹80L, down payment ₹16L, rate 8.5%, rent ₹25,000/month, 10-year horizon.
- Monthly EMI ≈ ₹55,800 (20-yr loan on ₹64L).
- Total EMIs over 10 yrs = ₹66.96L. Property value at 5% pa = ₹1.30 cr. Equity ≈ ₹66L.
- Total rent over 10 yrs at 5% annual rise ≈ ₹37.7L. Down payment invested at 12% = ₹49.6L.
✓ Buying builds ≈₹66L in equity but costs more in the short run; renting preserves flexibility and investment optionality. Break-even ≈ 12 years.
Frequently asked questions
This calculator simplifies a complex decision. Real estate, investments, and rental markets are unpredictable. Consult a financial advisor before making a property decision.