Quick answer
On our India defaults (₹80 lakh flat, ₹30,000 rent, 8.5% home loan, 20% down), renting and investing the difference in equity mutual funds leaves you about ₹13 lakh ahead after 10 years. The reason is simple: the EMI alone is ₹55,541, almost double the rent. Buying wins if prices grow faster than about 7% a year, your investments would earn under 8%, or comparable rent exceeds about ₹35,000.
Rent vs buy calculator India: how do you use it?
Enter the flat’s price, the rent for a similar flat in the same society or area, your home loan rate and down payment, then add stamp duty and registration to buying costs. On our India defaults, renting and investing the difference in equity mutual funds finishes about ₹13 lakh ahead after 10 years, because the EMI on an ₹80 lakh flat is nearly double the ₹30,000 rent.
This rent vs buy calculator for India simulates each month. The buyer pays the down payment, stamp duty and registration upfront, then the EMI, society maintenance, property tax, repairs and insurance. The renter pays rent, invests the ₹21.6 lakh the buyer spent upfront, and puts the monthly difference into a SIP. At the end, the buyer sells and pays brokerage, and we compare net worth. Our methodology covers the details.
Why our Indian defaults are set this way
| Input | Default | Reasoning |
|---|---|---|
| Flat price | ₹80,00,000 (₹80 lakh) | A typical 2BHK in a good suburb of a large metro |
| Rent | ₹30,000/month | Rent for a comparable 2BHK; a 4.5% gross yield |
| Home loan rate | 8.5% | A floating, repo-linked rate for a salaried borrower; see below |
| Tenure / down payment | 20 years / 20% | Banks usually lend up to 80% on loans of this size |
| Property tax | 0.1% | Municipal property tax is low relative to value |
| Buying costs | 7% | Stamp duty and registration (6–8%), legal and loan processing fees |
| Selling costs | 1% | Brokerage, usually 1–2% |
| Maintenance | ₹3,000/month + 0.5% a year | Society charges (about ₹3 per sq ft on 1,000 sq ft) plus repairs |
| Price / rent growth | 6% / 6% | Long-run metro averages |
| Investment return | 10% | A diversified equity SIP over 10+ years, after tax |
A note on rates: most new home loans in India are floating and linked to the Reserve Bank of India’s repo rate through an external benchmark. The RBI raised the repo rate by 25 basis points to 5.50% in October 2026 and moved its stance to “calibrated tightening”, and banks including SBI raised home loan rates soon after. Borrowers with strong credit scores may get rates in the low 8s; others pay more. When the repo rate changes, banks usually reset your rate within months and often extend your tenure rather than raise your EMI — check which your lender does.
Worked example: renting vs buying an ₹80 lakh flat
Upfront for the buyer: ₹16 lakh down payment plus ₹5.6 lakh in stamp duty, registration and fees = ₹21.6 lakh. The renter invests this lump sum in an equity fund on day one.
Home loan EMI: a ₹64 lakh loan at 8.5% over 20 years costs ₹55,541 a month. In year one, about ₹5.39 lakh of your EMIs is interest and only about ₹1.27 lakh repays principal.
Other owner costs: society maintenance (₹3,000), repairs (₹3,333), property tax (₹667) and insurance (₹333) add about ₹7,333 a month. Owning costs roughly ₹62,900 a month against ₹30,000 for renting. The renter can run a SIP of nearly ₹33,000 a month.
After 10 years: renting and investing finishes about ₹13 lakh ahead, and buying doesn’t break even within the decade. The break-even rent is about ₹35,000: if a comparable flat rents for more than that, buying wins on these assumptions. Over 20 years, renting’s lead grows to about ₹41 lakh.
What flips the verdict:
- Property price growth. At 7% a year, buying draws level around year 10. At 8%, buying wins by about ₹15 lakh after 10 years.
- Your investment return. If you’d earn 8% rather than 10%, buying wins narrowly. At 12%, renting wins by about ₹31 lakh.
- Discipline. The renter’s advantage exists only if the ₹33,000 a month is actually invested.
The 5% rule gives the same direction: ₹80,00,000 × 5% ÷ 12 = ₹33,333, more than the ₹30,000 rent, so renting looks better on the quick test too.
What does it cost to buy a flat in India?
| City / state | Stamp duty | Registration | Notes |
|---|---|---|---|
| Mumbai (Maharashtra) | 6% (incl. 1% metro cess) | 1%, capped at ₹30,000 | Women buyers get a 1% concession |
| Delhi | 6% (men), 4% (women) | 1% | Joint ownership often 5% |
| Bengaluru (Karnataka) | Around 5% plus cess and surcharge | Varies | Check the state’s registration portal; fees were revised in 2025 |
| Hyderabad (Telangana) | Around 7.5% all-in | Included | Stamp, transfer duty and registration combined |
| Chennai (Tamil Nadu) | 7% | 2% | Among the highest all-in costs, around 9% |
| Pune (Maharashtra) | Maharashtra rates, about 6–7% | 1%, capped at ₹30,000 | Includes metro cess |
Other costs to include:
- GST on under-construction flats: 5% (1% for affordable homes up to ₹45 lakh) without input tax credit. On an ₹80 lakh under-construction flat that can add about ₹4 lakh. Ready-to-move flats with an occupancy certificate and resale flats pay no GST.
- Corpus fund and advance maintenance: many new societies ask for one to two years of maintenance in advance plus a one-time corpus at possession. Add it to buying costs.
- Loan processing fee: typically up to 0.5% of the loan.
- TDS: on purchases of ₹50 lakh or more, the buyer must deduct 1% TDS from the payment to the seller. It isn’t an extra cost, but it’s your responsibility.
- Circle rate: stamp duty is charged on the higher of the agreement value and the government’s ready reckoner (circle) rate.
How do home loan tax benefits work under the old and new regimes?
The calculator doesn’t model tax deductions, so in India it slightly favours renting for old-regime taxpayers. Here’s how to think about the gap.
| Benefit | Old regime | New regime (default) |
|---|---|---|
| Interest on a self-occupied home | Up to ₹2 lakh a year | Not allowed |
| Principal repayment | Within the ₹1.5 lakh limit (with PF, ELSS, insurance) | Not allowed |
| Interest on a let-out property | Allowed, with loss set-off limits | Allowed against rental income only |
| HRA exemption for renters | Allowed if eligible | Not allowed |
These deductions continue under the Income-tax Act, 2025, which replaced the 1961 Act from 1 April 2026, with new section numbers for the old Section 24(b) and 80C benefits. Budget 2026 also clarified that pre-construction interest on a home you later occupy counts within the same ₹2 lakh annual limit.
What it’s worth: in the default example, first-year interest is about ₹5.4 lakh, so the ₹2 lakh cap applies. For someone in the 30% slab on the old regime, that saves up to about ₹62,400 a year including cess. If your 80C limit isn’t already used by PF, the principal can add more. Joint owners who are both co-borrowers can each claim. Remember that renters on the old regime may claim HRA exemption too, which narrows the difference. Under the new regime, there’s no home loan benefit on a self-occupied flat at all.
When you sell: long-term capital gains on property held more than 24 months are taxed at 12.5% without indexation, with reinvestment exemptions available if you buy another home. Equity mutual fund gains held over a year are taxed at 12.5% above ₹1.25 lakh a year. Our 10% investment return is meant to be after these taxes.
Why low rental yields favour renting in Indian metros
A rental yield is the annual rent divided by the property price. In Indian metros, gross yields are low compared with home loan rates. ANAROCK’s mid-2026 data put gross yields at roughly 3.2% in Delhi, 4.3% in Mumbai and Gurugram, 3.9% in Noida and 4.6% in Bengaluru. After society maintenance and repairs, net yields are lower still.
When a lender charges 8.5% and the home “earns” you 3–4.5% in rent you no longer pay, the difference has to come from price growth. That’s why the verdict depends so heavily on whether your city’s prices grow faster than about 7% a year. For more on how investing changes the outcome, see renting and investing vs buying a house and the opportunity cost of a down payment.
How do Mumbai, Delhi NCR, Bengaluru, Hyderabad and Pune compare?
- Mumbai: the highest prices in the country, small carpet areas and high society charges in new towers. Yields have improved, but prices of ₹2 crore and more for family-sized flats keep EMIs far above rent.
- Delhi NCR: Delhi has the lowest yields among the big cities, while Gurugram and Noida have seen some of the fastest price growth since 2019. Buyers betting on continued growth may prefer buying; others will find renting much cheaper.
- Bengaluru: the strongest yield improvement in recent years and solid rent growth driven by tech hiring. Watch high security deposits for renters and long delays on some under-construction projects.
- Hyderabad: relatively affordable with fast price and rent growth; buying often looks closer to break-even.
- Pune: moderate prices and steady rents; a balanced market where your horizon decides the answer.
Use the calculator’s horizon setting to see how the result moves between 5, 10 and 20 years in your city, and compare with our rent and invest vs buy calculator.
When does renting win vs buying in India?
Renting tends to win when:
- The EMI is much higher than the rent for a similar flat, as in most metros.
- You’ll invest the difference every month in a SIP and leave it alone.
- Your job may move you to another city within five to seven years.
- You’re on the new tax regime and get no home loan deduction.
- The project is under construction, with GST and delivery risk.
Buying tends to win when:
- You plan to stay 15 years or more in the same city.
- Local prices are growing faster than about 7% a year.
- You’d otherwise keep savings in fixed deposits or not save at all.
- You’re on the old regime in a high slab and can use the full ₹2 lakh interest deduction.
- You value security from 11-month lease renewals, rent hikes and landlord moves.
India rent vs buy checklist
- Compare rent for the same size flat in the same society or locality.
- Get a loan sanction letter for your actual rate, not the bank’s best advertised rate.
- Calculate stamp duty and registration for your state, and check the circle rate.
- Add GST if under construction, plus corpus fund and advance maintenance.
- Estimate your tax benefit only if you’ll stay on the old regime.
- Choose an investment return you’ll actually earn — equity SIP or FD.
- Set the horizon to how long you’ll live in that city.
- Check the break-even rent against real listings.
This calculator is for education only, not investment or tax advice; consult a SEBI-registered adviser or chartered accountant for your case.
Frequently asked questions
Is it better to rent or buy a house in India?
In most metros, renting is cheaper month to month because rental yields are only around 3–4.5% while home loans cost 8–9%. Renting and investing the difference wins if you invest consistently and equity returns are near 10% a year. Buying wins with strong local price growth, a long stay, or if you'd otherwise spend the savings. Run your own numbers.
How is the home loan EMI calculated?
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan, r the monthly rate and n the number of months. On a ₹64 lakh loan at 8.5% for 20 years, r is 0.708% and n is 240, giving an EMI of about ₹55,541. In the first year, about ₹5.4 lakh of your EMIs goes to interest.
Can I claim tax benefits on a home loan under the new tax regime?
Not for a self-occupied home. Under the old regime you can deduct up to ₹2 lakh of interest a year on a self-occupied property and include principal repayment within the ₹1.5 lakh limit that also covers PF, ELSS and insurance. The new regime, which is the default, doesn't allow these deductions for a self-occupied home.
How much are stamp duty and registration charges?
Usually 6–9% of the property value in total, depending on the state. Mumbai charges 6% stamp duty, including metro cess, plus 1% registration capped at ₹30,000. Delhi charges 6% for men and 4% for women plus 1% registration. Duty is charged on the higher of the agreement value and the government circle rate.
Is GST payable when buying a flat?
Only on under-construction property. GST is 5% without input tax credit on regular homes and 1% on affordable homes priced up to ₹45 lakh within carpet-area limits. Ready-to-move flats with an occupancy or completion certificate, and resale flats, don't attract GST.
What return should I assume for the money I'd invest instead?
Our default is 10% a year after tax, a cautious figure for a diversified equity mutual fund SIP held for 10 years or more. Equity returns are volatile and not guaranteed. If you'd put the money in fixed deposits instead, use around 6–7%, which makes buying look much better.