See whether buying a home or renting and investing leaves you better off
Enter the price of the home you’d buy and the rent for a similar home nearby.
Set how long you expect to live there — it matters more than anything else.
Pick your city. See whose net worth is higher at the end, when buying pulls ahead, and what would change the answer.
We follow the same money down both paths and compare your net worth at the end — not just EMI against rent.
The buyer pays the minimum down payment, stamp duty, registration and fees. The renter invests the same amount instead.
The buyer pays EMI plus repairs and property tax. The renter pays rent, which goes up 5% every year.
Each month, whoever spends less invests the difference. Once the loan is repaid, it’s usually the owner.
Buyer: home value after selling costs, minus the loan left, plus any investments. Renter: investments after capital gains tax. The higher net worth wins.
Long-run averages, kept the same every year. Real prices, rents and returns move around, so treat the result as a guide.
| Home price growth | 7% a year | Rent increase | 5% a year |
|---|---|---|---|
| Investment return | 10% a year, before 12.5% tax | Home loan | 8.5% for 20 years, minimum down payment |
| Repairs & property tax | 0.5% of value a year | Selling cost | 1% brokerage |
| Use | You live in the home | Tax | New regime (no home loan or HRA deduction) |
In Indian metros, a year's rent is often only 2–4% of a home's price, while a home loan costs 8–9% a year. So month to month, renting is usually cheaper. Buying catches up through price growth and as rent rises — the longer you stay, the more it helps.
| Year's rent as % of price | What it usually means |
|---|---|
| Under 3% | Renting is much cheaper each month; buying needs strong price growth or a long stay |
| 3–5% | Close call — your stay, rate and price growth decide it |
| Over 5% | Buying usually wins over 8–10 years |
It depends on how long you’ll stay, how rent compares with the price, and how prices and your investments grow. Buying usually pays off when you stay long and rent is high relative to the price. Use the calculator with your own numbers.
We assume the new tax regime, where neither home loan interest on a home you live in nor HRA saves tax. In the old regime, a buyer can deduct up to ₹2 L of interest a year and a salaried renter can claim HRA — the two often roughly balance out. A Butter advisor can work through your exact case.
We use 10% a year, a long-run figure for a diversified equity portfolio, before tax. Returns vary a lot from year to year. If you’d keep the money in fixed deposits instead, buying looks much better than shown.
Then buying comes out much further ahead than shown. The renting result assumes you invest your down payment and every rupee you save each month, without fail.
To compare like with like: the renter’s investments are counted after tax, so the home is counted at what you’d actually get if you sold it, after about 1% brokerage. We don’t deduct capital gains tax on the home, since reinvesting in another home can save it.