Rent vs Buy Calculator — Make the Right Housing Decision
Compare the true cost of renting versus buying a home over 5 10 15 and 20 years. Factor in property appreciation maintenance costs tax benefits and opportunity cost of down payment.
The rent versus buy decision is one of the most important financial choices you will make. Buying builds equity and offers tax benefits but locks up capital and adds maintenance costs. Renting offers flexibility and lower upfront costs but builds no equity. The answer depends on your city home prices rental yields how long you plan to stay and what else you would do with the down payment money.
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Key Information
| Parameter | Details |
|---|---|
| India Average Rental Yield | 2% - 3.5% of property value |
| US Average Rental Yield | 4% - 6% of property value |
| India Property Appreciation | 5% - 8% annually (metros) |
| US Property Appreciation | 3% - 5% annually (national average) |
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Use Calculator NowFrequently Asked Questions
Is it better to rent or buy in India?
In most Indian metros buying makes sense only if you plan to stay 7+ years. Rental yields are only 2-3% meaning a Rs 1 crore property rents for Rs 20000-25000/month. The same Rs 20 lakh down payment invested in mutual funds at 12% would generate far more wealth in 10 years than property appreciation. However emotional value of home ownership and forced savings through EMI benefit many families.
What is the 5% rule for rent vs buy?
The 5% rule states: multiply the home value by 5% and divide by 12 to get the monthly breakeven point. If rent is below this number renting is better. For a $400000 home: $400000 x 5% / 12 = $1667/month. If comparable rent is under $1667 renting wins financially. If rent is higher buying wins. This rule accounts for property tax maintenance and opportunity cost.
How long should I plan to stay before buying?
In the US you generally need to stay at least 5-7 years for buying to beat renting after accounting for closing costs agent commissions and transaction fees. In India the breakeven period is longer at 7-10 years due to lower rental yields and high transaction costs like stamp duty and registration charges.
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Last updated: 24 March 2026