Home loan rates in India are near their lowest level since 2020. The RBI cut the repo rate by a cumulative 125 basis points through 2025, bringing it to 5.25%. The April 2026 MPC held the rate steady at 5.25%, confirming this as the current baseline.
Select lenders and marketplace offers show starting floating home loan rates around 7.1–7.75%, depending on borrower profile, lender, and scheme. Urban rents rose 7–9% in the first half of 2025 across major metros and are expected to keep climbing.
**Kedil's rent vs buy calculator** is built for salaried Indians deciding between owning and renting. Enter your city, target property price, loan rate, current rent, and how many years you plan to stay — and it models net wealth for both paths over 10 to 20 years. It accounts for EMI cost, opportunity cost on the down payment, rent inflation at 6–8% annually, property appreciation, and home loan tax deductions under the old income tax regime. The calculator is free at [kedil.money/calculators/rent-vs-buy](https://www.kedil.money/calculators/rent-vs-buy).
The rent vs buy debate is not about sentiment. It's an EMI calculation, a down payment calculation, and a tax calculation — all run at the same time. Most people skip at least one of them.
Here's how to think through each one.
## What does a home loan actually cost you per month?
Take a ₹75 lakh property in Chennai — a reasonable 2BHK in OMR or Velachery.
With 20% down, or ₹15 lakh, you're borrowing ₹60 lakh. At 7.35% over 20 years, your EMI is approximately ₹47,800 per month. That's your visible cost.
The less visible ones: stamp duty and registration in Tamil Nadu can add roughly 9–11% of property value, depending on the transaction type and current registration fee. On a ₹75 lakh property, that can mean roughly ₹6.75–8.25 lakh paid upfront. Add interior setup, maintenance charges, and property insurance. In the first year, your total out-of-pocket cost can easily be far above the down payment.
For comparison, a 2BHK on rent in the same areas costs ₹20,000–₹28,000 per month. The monthly gap between owning and renting is real and significant — roughly ₹20,000 in EMI alone. You can [track your total monthly EMI obligation on Kedil](https://app.kedil.money/) to see how a home loan would stack against any other EMIs you're already servicing.
## What happens to the ₹15 lakh down payment if you don't buy?
This is the part of the calculation most people skip.
₹15 lakh invested at 10–12% CAGR grows to roughly ₹39–47 lakh over 10 years. That return is your opportunity cost — money you're giving up by locking capital into a down payment instead.
This doesn't make renting automatically better. It just means the decision isn't as simple as "EMI vs rent." You need to account for what the down payment would otherwise produce.
If you rent and invest the difference between your EMI and your rent consistently — say ₹20,000 per month in SIP — that's ₹24 lakh invested over 10 years. At 10% CAGR, it grows to approximately ₹41 lakh. That's the renter's wealth-building scenario.
The buyer, meanwhile, has built equity through principal repayment and property appreciation. A ₹75 lakh property appreciating at 7–8% annually is worth roughly ₹1.48–1.62 crore in 10 years.
Which number comes out ahead depends entirely on property appreciation in your specific locality, and on whether the renter actually invests the monthly difference — which many don't.
## What are the tax benefits of buying under the old regime?
If you're on the old income tax regime, a home loan gives you two deductions:
- Interest paid: up to ₹2 lakh per year under Section 24(b)
- Principal repaid: up to ₹1.5 lakh per year under Section 80C, shared with PPF, LIC, ELSS, and other eligible investments
At the 30% tax slab, ₹2 lakh in interest deduction can save up to ₹60,000 in taxes annually, before cess. Over 20 years, that's a meaningful offset against your total interest outgo.
**Important:** Under the new tax regime, which is the default regime, these deductions are not available for self-occupied property in the same way. If you're already on the new regime and plan to stay there, factor this in — the effective cost of your loan is higher than the headline rate suggests.
Joint home loans with a co-owning spouse can increase the deduction available, because each eligible co-borrower can claim deductions separately based on their repayment share.
## When does buying clearly make sense?
Buying works in your favour when:
- You plan to stay in the same city for at least 7–10 years. Shorter than that, transaction costs such as stamp duty, registration, brokerage, and interiors can eat into any appreciation.
- Your total monthly EMI stays under 30% of your take-home salary. On a ₹90,000 take-home, your home loan EMI should ideally be under ₹27,000. If it's ₹47,800 on a ₹60 lakh loan, you need a higher salary or a smaller loan.
- You're on the old tax regime and can actually use the Section 24(b) and 80C deductions.
- Property in your target locality has strong end-user demand, not speculative supply.
## When does renting make more sense?
Renting works in your favour when:
- Your job requires mobility, especially if you're in IT or a role with transfers every 2–3 years. Buying and then selling quickly is expensive.
- The EMI on a decent home in your target area would exceed 35–40% of your take-home. This strains your monthly budget and leaves less room for other EMIs, emergency savings, and investments.
- You can actually invest the monthly difference between EMI and rent consistently. The financial case for renting collapses if the savings are spent instead of invested.
## A note on Chennai specifically
Chennai remains one of India's more affordable metros for real estate. A 2BHK in Medavakkam or Porur may run around ₹50–70 lakh. In OMR or Velachery, it may be closer to ₹65–90 lakh. Rent for the equivalent flat is often around ₹18,000–₹28,000 per month, depending on society, furnishing, and exact location.
At current loan rates, the EMI on a ₹60 lakh loan over 20 years is around ₹47,800 — nearly double the rent on a comparable flat. That gap is the core of the decision: do you want to service the loan for 20 years and own the asset at the end, or rent and invest the difference?
There's no universal answer. The honest one depends on your salary, your city, your loan amount, and how long you're planning to stay. Use [Kedil's rent vs buy calculator](https://www.kedil.money/calculators/rent-vs-buy) to model your exact numbers.
## FAQ
### Is 2026 a good time to buy a home in India?
Home loan rates are near 5-year lows following the RBI's rate cuts through 2025. That improves affordability for buyers. Whether it's the right time for you depends on your salary, down payment readiness, target property price, and how long you plan to stay in the city.
### What is the EMI on a ₹50 lakh home loan at current rates?
At 7.35% over 20 years, the EMI on a ₹50 lakh loan is approximately ₹39,800 per month. At 7.10%, it drops to around ₹39,100. Use [Kedil's rent vs buy calculator](https://www.kedil.money/calculators/rent-vs-buy) to model your specific loan amount and tenure.
### Can I claim home loan tax benefits under the new tax regime?
For a self-occupied home, the main Section 24(b) interest deduction and Section 80C principal deduction are generally old-regime benefits. Under the new tax regime, these benefits are not available in the same way. If your home loan is large and you're in a high tax slab, compare both regimes before deciding.
### How much rent increase should I assume when calculating rent vs buy?
Urban rents in India's major metros rose around 7–9% in the first half of 2025. A conservative assumption for long-term modelling is 6–8% annual rent inflation. This matters because rent compounds — what costs ₹25,000 today costs roughly ₹45,000–₹54,000 in 10 years at that rate.
### What is a reasonable down payment for a home in India?
Banks typically lend up to 80% of property value for many home purchases, so you may need around 20% as a down payment. On a ₹75 lakh property, that's ₹15 lakh — not counting stamp duty, registration, interiors, brokerage, and moving costs. Budget for the full outlay, not just the down payment.
**Try Kedil's rent vs buy calculator:** [kedil.money/calculators/rent-vs-buy](https://www.kedil.money/calculators/rent-vs-buy)
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