worldofcalcsRent or Buy a House in India? The Numbers for an ₹80 Lakh Flat (2026)
"Rent is money down the drain" is the most common argument for buying. But a home loan's interest, stamp duty and upkeep are also money you never get back. The fair comparison is between your net worth in each case, assuming the renter invests what the buyer would have spent.
The example
- Buy: an ₹80 lakh flat with 20% down (₹16 lakh) and 7% stamp duty and buying costs (₹5.6 lakh). Loan of ₹64 lakh at 8.5% for 20 years: EMI ₹55,541. Upkeep and property tax 0.5% of the value a year; price grows 5% a year; 1% selling costs.
- Rent: the same flat for ₹25,000 a month, rising 5% a year. The renter invests the ₹21.6 lakh up front, and every month invests the difference between the buyer's EMI plus upkeep and the rent, earning 10% a year.
Result after 10 years
| Net worth | |
|---|---|
| Buyer (home value minus loan left and selling costs) | ₹84,21,241 |
| Renter (investments) | ₹1,14,59,852 |
Renting comes out ₹30,38,611 ahead. The main reason is the rental yield: ₹25,000 a month is only 3.75% of the price a year, while the loan costs 8.5%.
How the answer changes
By rent (10 years, everything else the same):
| Monthly rent | Rental yield | Buyer | Renter | Better |
|---|---|---|---|---|
| ₹20,000 | 3% | ₹84,21,241 | ₹1,26,69,823 | Rent |
| ₹30,000 | 4.5% | ₹84,21,241 | ₹1,02,49,881 | Rent |
| ₹35,000 | 5.25% | ₹84,21,241 | ₹90,39,910 | Rent |
| ₹40,000 | 6% | ₹84,38,062 | ₹78,46,760 | Buy |
By property price growth: at 7% a year renting is still ahead by only ₹4,26,058; at 8% a year buying wins by ₹10,57,069.
By investment return: if the renter earns 7% (FDs, PPF) instead of 10%, renting is ahead by just ₹7,91,441. At 12% from equity, the gap grows to ₹48,32,163.
By time: after 5 years renting is ahead by ₹14,46,680, and over 20 years by ₹1,12,69,731, as long as the renter keeps investing.
When buying makes sense
- Rents are high compared with prices (yield of 5–6% or more), which is more common in smaller cities.
- You expect property prices where you live to rise 7–8% a year or more.
- You would spend the difference rather than invest it. Then the EMI works as forced saving.
- You plan to stay 10 years or more, and you value the security of owning.
- You use the old tax regime and can claim home loan interest (up to ₹2 lakh a year) and principal under 80C.
When renting makes sense
- Big-city rents of 2–4% of the price.
- You may move for work within 5–7 years; stamp duty and selling costs eat into the gains.
- You invest steadily, for example through a monthly SIP.
Run your own numbers
Change the price, rent, growth and returns in the rent vs buy calculator. To see what you can borrow, use the home loan eligibility calculator, and for the most you can spend on a home, the home affordability calculator.
Returns from investments are not guaranteed, and property prices can fall as well as rise. The comparison leaves out tax benefits and non-financial reasons for owning a home.