Rent vs Buy Calculator
The rent vs buy decision is one of the biggest in personal finance. Buying builds equity but locks up capital; renting keeps you flexible but the money is "gone." This calculator compares total cost of buying (EMIs + opportunity cost on down payment) against total rent paid over the same period — including rent inflation.
Frequently Asked Questions
What does "opportunity cost of down payment" mean?+
When you make a down payment, that money is locked in the house. If you had invested it instead (say, in equity mutual funds at 10%), it would have grown. This calculator adds that missed growth to the true cost of buying — giving a fairer comparison.
When does buying make more sense than renting?+
Buying generally wins when: (1) you plan to stay 7+ years (transaction costs and EMI-heavy early years need time to amortise), (2) your EMI is comparable to rent in the area, (3) you expect the property to appreciate significantly. Renting wins when you're mobile, markets are frothy, or capital is better deployed elsewhere.
Is property appreciation included in this calculation?+
No — this calculator shows costs only. Property appreciation is highly location-dependent and can go either way. If your property appreciates faster than your investment return assumption, buying looks better; if slower, renting wins. Run your own scenario by adjusting the investment return rate.
What's a fair investment return to use for the renting scenario?+
Use the return you'd realistically earn: 10–12% for equity mutual funds (long-term), 7–8% for debt funds. Be conservative — the bias is to make buying look harder, but it forces honest comparison. If you wouldn't actually invest the down payment, buying is often the better forced-savings mechanism.