Rent versus buy calculator: compare your wealth after some years
Is buying better than renting? It depends on the loan rate, how much the home price and rents grow, and what you could earn by investing instead. This calculator compares your wealth in both cases.
How to use this calculator
- Enter the home price, down payment and the loan rate and term.
- Enter how fast you expect the home price and your rent to grow, and the upkeep cost.
- Enter the rent you would pay today and the return you could earn by investing instead.
- Choose the number of years to compare and read the wealth in each case.
Worked examples
Example 1
A ₹60,00,000 home, 20% down, 9% loan for 20 years, 5% price growth, rent ₹20,000, 7% return, compared over 15 years.
You enter
| Home price | ₹60,00,000 |
|---|---|
| Down payment | 20% |
| Home loan rate (per year) | 9% |
| Loan term (years) | 20 |
| Home price growth (per year) | 5% |
| Upkeep and charges (% of price a year) | 1% |
| Rent you would pay today (per month) | ₹20,000 |
| Yearly rent increase | 5% |
| Return on money you invest instead (per year) | 7% |
| Years to compare | 15 |
| Selling cost (% of price) | 2% |
You get
| Monthly loan instalment | ₹43,187 |
|---|---|
| Buy: home value after 15 years | ₹1,24,73,569 |
| Buy: loan still owed | ₹20,80,456 |
| Buy: your wealth after selling costs | ₹1,01,43,642 |
| Rent and invest: your wealth | ₹1,07,33,751 |
| Difference (buy minus rent) | −₹5,90,109 |
Example 2
The same with faster home price growth of 8%.
You enter
| Home price | ₹60,00,000 |
|---|---|
| Down payment | 20% |
| Home loan rate (per year) | 9% |
| Loan term (years) | 20 |
| Home price growth (per year) | 8% |
| Upkeep and charges (% of price a year) | 1% |
| Rent you would pay today (per month) | ₹20,000 |
| Yearly rent increase | 5% |
| Return on money you invest instead (per year) | 7% |
| Years to compare | 15 |
| Selling cost (% of price) | 2% |
You get
| Monthly loan instalment | ₹43,187 |
|---|---|
| Buy: home value after 15 years | ₹1,90,33,015 |
| Buy: loan still owed | ₹20,80,456 |
| Buy: your wealth after selling costs | ₹1,65,71,898 |
| Rent and invest: your wealth | ₹1,12,35,611 |
| Difference (buy minus rent) | ₹53,36,288 |
How it works
Buying: you pay the down payment, then each month the loan instalment plus upkeep. At the end your wealth is the home's value, less selling costs, less the loan still owed. Renting: you invest the down payment, and each month invest whatever buying costs above your rent.
The answer swings a lot with the growth and return numbers, so run several. A home also brings security and choice that a spreadsheet cannot value, and it can be hard to sell quickly; renting brings flexibility.
Formula
Buy wealth = home value x (1 - selling cost) - loan owed. Rent wealth = the invested pot after each month's difference between buying costs and rent.
Common questions
Does it include tax benefits on a home loan?
No. Add them yourself if they apply.
Why does a small change flip the answer?
Both choices are sensitive to growth and return assumptions.
Is it right for me?
Treat it as a way to see the trade-offs, not as advice.
Learn more
Read the lesson Goals and time horizons on pusaram.com for the ideas behind this calculator.
Calculators give estimates for learning and planning. They are not financial, tax, legal or medical advice, and results depend entirely on the numbers you enter. Check rates, limits and rules with an official source or a qualified professional before acting.