Rent vs Buy Break-Even Calculator: When Buying Pays Off

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Formula at a glance

Rent vs Buy Break-Even Calculator: Gap each year — Buyer's net worth − renter's net worth. Example: ₹50 lakh home, ₹20,000 rent → Break-even point: Year 9 — buy if you will stay longer than this — How the Rent vs Buy Break-Even Calculator works: Gap each year — Buyer's net worth − renter's net worth

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📘 About the Rent vs Buy Break

Stamp duty, registration, brokerage and interest make the early years of owning expensive. Renting is cheaper at first, but rent rises every year while the EMI stays flat, and the home may grow in value. At some point the buyer's net worth catches up with the renter's — that is the break-even point.

Enter the home price, rent and your assumptions. The calculator compares both paths for up to 40 years, shows the first year buying comes out ahead, and works out the rent at which buying would pay off within 10 years.

🧮 Formula

Gap each year

Buyer's net worth − renter's net worth

Break-even

First year the gap turns positive

Rental yield

Yearly rent ÷ home price × 100

✏️ Worked examples

₹50 lakh home, ₹20,000 rent

You enter
Currency	₹ Indian rupee
Home price	5000000
Monthly rent for a similar home	20000
Down payment	20%
Home loan interest rate	8.5%
Loan tenure	20 years
Rent increase a year	5%
Home price growth a year	6%
Return on investments (after tax)	8%
Upkeep & property tax a year	1 % of value
Stamp duty, registration & brokerage	7%
Selling costs	2%

You get
Break-even point	Year 9 — buy if you will stay longer than this
Home loan EMI	₹34,713 vs rent ₹20,000
Price-to-rent ratio	20.8
Rental yield	4.8% a year
Rent at which buying pays off within 10 years	₹19,468 a month or more

Year 9 — buy if you will stay longer than this.

₹80 lakh flat, ₹25,000 rent

You enter
Currency	₹ Indian rupee
Home price	8000000
Monthly rent for a similar home	25000
Down payment	20%
Home loan interest rate	8.5%
Loan tenure	20 years
Rent increase a year	5%
Home price growth a year	6%
Return on investments (after tax)	8%
Upkeep & property tax a year	1 % of value
Stamp duty, registration & brokerage	7%
Selling costs	2%

You get
Break-even point	Renting stays ahead for all 40 years checked
Home loan EMI	₹55,541 vs rent ₹25,000
Price-to-rent ratio	26.7
Rental yield	3.75% a year
Rent at which buying pays off within 10 years	₹31,148 a month or more

Renting stays ahead for all 40 years checked.

🧭 How to use this calculator

What you enter

Currency
Home price
Monthly rent for a similar home
Down payment (%)
Home loan interest rate (%)
Loan tenure (years)
Rent increase a year (%)
Home price growth a year (%)
Return on investments (after tax) (%)What the renter earns by investing the money saved — a balanced mix, after tax.
Upkeep & property tax a year (% of value)
Stamp duty, registration & brokerage (%)
Selling costs (%)

What you get

Break-even point
Home loan EMI
Price-to-rent ratio
Rental yield
Rent at which buying pays off within 10 years

💡 Lower your break-even time

Negotiate the price and brokerage.
Prepay the home loan when rates are high.
Buy where rents are high compared with prices (rental yield above 3.5%).
Avoid buying a home you may need to sell within a few years.

❓ Frequently asked questions

How long should I stay to make buying worth it?

Usually at least 7–10 years in India because of 6–8% buying costs and low rental yields; in cities where rent is high compared with prices it can be 4–6 years.

What rental yield makes buying sensible?

Indian homes typically yield 2–3.5% a year. Buying becomes attractive as the yield approaches the after-tax home-loan rate minus expected price growth — the calculator shows the rent level that makes it pay off in 10 years.

Does a bigger down payment change the break-even?

Yes. A larger down payment cuts interest but also means the renter invests more, so the effect depends on whether your loan rate is above or below your investment return.

⚖️ Rent vs Buy Break-Even Calculator