Rent vs Buy Calculator — Make the Right Housing Decision — USA 2026
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.
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.
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.
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Rent vs Buy Calculator
Understanding Your Investment Returns
This calculator projects your returns using compound interest, where your earnings generate their own earnings over time. The power of compounding means that even small regular investments can grow into substantial wealth over long periods. For example, investing just Rs 5,000 per month at 12% expected returns for 25 years can grow to over Rs 1 crore — of which only Rs 15 lakh is your own money and Rs 85 lakh is compounding returns. The key factors that determine your final corpus are: the amount invested, the rate of return, the duration of investment, and the frequency of compounding.
Important Considerations
Past returns do not guarantee future performance, especially for market-linked instruments like mutual funds and equities. The returns shown are estimates based on the rate you enter. Equity investments carry market risk but have historically delivered 12-15% CAGR over 15+ year periods in India. Fixed income options like PPF (7.1%) and FD (6-7.5%) offer lower but more predictable returns. Diversifying across asset classes — equity, debt, gold, and real estate — reduces overall portfolio risk while optimizing returns for your risk tolerance.
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.
What is compound interest and why does it matter?
Compound interest means you earn interest on your interest, not just your principal. Over long periods, this creates exponential growth — even small regular investments can grow into substantial wealth over 15-25 years.
Should I invest regularly or as a lump sum?
Regular investing (dollar-cost averaging) smooths out market volatility by buying at various price points. Lump sum investing works better if markets are undervalued. For most people, regular monthly investing is simpler and more disciplined.
How much should I invest monthly to reach my goal?
The amount depends on your target, timeline, and expected returns. Use this calculator to model different scenarios. The key factors are starting early, investing consistently, and reinvesting returns.
Are investment returns taxable?
Tax treatment varies by investment type and country. Capital gains, dividends, and interest income may be taxed differently. Consult a tax professional for advice specific to your situation and jurisdiction.
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Last updated: March 2026