Save money3 min read · Updated 17 October 2026
Rent or buy a home in India? A worked example with a ₹80 lakh flat
Is buying with a home loan better than renting and investing the difference? A worked example with every assumption shown, and how to test your own numbers.
The assumptions
- Flat price ₹80 lakh, 20% down payment, loan for 20 years at 8.5%.
- Rent ₹22,000 a month, rising 5% a year.
- Property price rising 5% a year; yearly maintenance 1% of its value; one-time buying costs of 6%.
- The renter invests the down payment and any monthly savings at 8% a year, before tax.
Change any of these and the answer changes, which is the point. Use Can I afford a home? to try your own.
Net worth after each period
| After | Buyer's equity | Renter's investments | Ahead |
|---|---|---|---|
| 5 years | ₹45,70,113 | ₹58,92,716 | Renter |
| 10 years | ₹85,51,552 | ₹1,11,59,196 | Renter |
| 15 years | ₹1,39,24,307 | ₹1,84,69,000 | Renter |
| 20 years | ₹2,12,26,382 | ₹2,86,62,762 | Renter |
Buyer's equity is the flat's value minus the loan still owed. This is an illustration, not a forecast.
What the numbers leave out
- Taxes on investment gains and the home loan tax benefits, which depend on your regime.
- The value of owning where you live: stability, no landlord and freedom to modify.
- The risk that prices or investments do worse than assumed.
How to decide
- Plan to stay more than 7 to 10 years: buying becomes more attractive.
- If the rent is low compared with the price, renting and investing can win.
- Do not stretch the EMI. Test it against a rate rise with What if rates rise?.
Common questions
Is it better to rent or buy in India?
It depends on how long you will stay, the price-to-rent ratio and what you can earn by investing the difference. A longer stay favours buying.
How long should I stay in a home I buy?
Often 7 to 10 years or more for buying to beat renting, because of buying costs and the early years of mostly interest.
Does the home loan tax benefit change the answer?
It can, under the old regime. The new regime gives no deduction for a home you live in. See our tax guide.