⚖️ Rent vs Buy Calculator
Compare projected net worth: buying with a home loan vs renting and investing the difference
🏠 If You Buy
🏘️ If You Rent
📊 Comparison
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Frequently Asked Questions
How does the Rent vs Buy Calculator work?
It simulates both scenarios year by year over your chosen horizon. If you buy, your property value grows at the appreciation rate while your loan balance reduces via EMI payments — net worth is property value minus remaining loan. If you rent, your down payment plus any monthly savings (EMI minus rent) are invested at your chosen return rate — net worth is the resulting investment corpus.
What counts as "Net Worth" in each scenario?
For buying, net worth = current estimated property value − outstanding loan balance. For renting, net worth = the value of the investment portfolio built from the down payment plus any monthly amount saved (when EMI exceeds rent) growing at the investment return rate. Rent paid and maintenance/tax paid are treated as costs and not included in net worth.
What if my EMI is higher than my rent?
If the EMI is higher than the rent, the renter is assumed to invest only the difference between rent and EMI when it's positive — i.e. when rent is cheaper than the EMI, the renter invests the savings (EMI − rent) every month in addition to the lump-sum down payment.
How important is the property appreciation rate assumption?
Very important — it's one of the most sensitive inputs. A higher appreciation rate significantly boosts the "Buy" net worth over long horizons, while a lower or flat appreciation rate can make renting and investing the difference more attractive. Try a few different rates to see how sensitive your result is.
Does this calculator account for taxes or rental income?
No — this is a simplified comparison for someone deciding whether to live in a home they own versus rent. It does not account for income tax benefits on home loan interest/principal, capital gains tax on property sale, brokerage/registration costs, or the possibility of renting out the purchased property.
Why might renting come out ahead even with a higher final property value?
Because "Buy" net worth subtracts the remaining loan balance, and includes ongoing maintenance/property tax costs that don't build wealth. If your investment return rate is high relative to home appreciation, the compounding on invested savings can outpace the equity built in the home, especially over shorter horizons.
What happens to my rental security deposit in the "Rent" scenario?
The security deposit is subtracted from your down payment before it's invested, since that money is locked up with the landlord rather than earning investment returns. It's added back to your "Rent" net worth only in the final year, when it's assumed to be refunded to you.
Why does the down payment matter even though it's not part of the EMI comparison?
Your down payment represents the opportunity cost of buying — money that, if you rented instead, could be invested from year one and compound at your chosen return rate. A larger down payment locked into the property is capital that the "Rent" scenario gets to invest immediately, which can meaningfully change the comparison especially over longer horizons.