Rent vs Buy Calculator 2026

Price-to-Rent ratio divides property price by annual rent. A ratio below 15 favors buying, 15-20 is neutral, and above 20 favors renting. Most Indian metros have ratios of 25-35, suggesting renting is often more financially sound. For example, a Rs. 1 Crore flat renting at Rs. 25,000/month has a ratio of 33 (1,00,00,000 / 3,00,000 = 33).

Banks typically require 10-20% down payment for home loans. A 20% down payment gets you better interest rates and avoids PMAY restrictions. However, consider opportunity cost - that Rs. 20 Lakh could grow to Rs. 62 Lakh in 10 years at 12% returns. Balance between loan terms and investment potential.

If your home loan rate is 8.5% and investment returns are 12%, mathematically investing is better. However, home loan interest gets tax benefits (Section 24), making effective rate ~6% for 30% tax bracket. Prepaying gives guaranteed returns equal to interest saved. Consider your risk appetite and peace of mind.

Break-even is when total buying costs equal total renting costs + investment returns. In Indian metros with high P/R ratios, this typically ranges from 10-15 years. If you plan to stay shorter than break-even, renting makes more financial sense. Our calculator shows exact break-even based on your inputs.

Historical property appreciation averages 5-8% in metros, though recent years have seen lower growth (3-5%) in Tier-1 cities. Tier-2 cities are seeing higher growth (8-12%). Compare this to equity returns of 12-15% over long term. Location, infrastructure development, and timing significantly impact appreciation.

Beyond property price: Stamp duty (5-7%), Registration (1%), GST for under-construction (5%), Brokerage (1-2%), Interior/Furnishing (10-15% of property), Annual maintenance (1-2%), Property tax, Society charges. These can add 20-30% to your total investment.