Should you rent or buy a home in India? It is one of the biggest money decisions you will make. And in 2026, the numbers tell a story that a lot of people do not want to hear.
Let me give you the math. In Mumbai Andheri, rental yields are around 3.13%. That means if you own a ₹1 crore flat, you might get ₹2.6 lakh a year in rent. Home loan rates are 8.5% to 9%. So you are paying the bank 8.5% to borrow money to buy an asset that earns you 3% if you rent it out. There is a gap. And that gap says something. From pure math, renting often wins.
Here is what I would do if I were a young professional who might move cities. Rent. Take the difference between what your EMI would be and what you actually pay as rent, and invest it in equity. Over 10 or 15 years, that invested amount can grow a lot. A home loan EMI of ₹50,000 versus rent of ₹25,000 means you have ₹25,000 a month to put into SIPs. That is ₹3 lakh a year. Compounded over time, it adds up. Buying only makes sense if you plan to stay put for 10 years or more. Otherwise you pay registration, stamp duty, and brokerage, and you might sell in a few years when you relocate. The transaction costs eat into any gains.
Yes, there are tax benefits. Section 24(b) gives you deduction on home loan interest. 80C gives you deduction on principal. But do not let the tax tail wag the investment dog. Tax savings are nice. They are not a reason to buy a house you cannot afford or do not need. Run the numbers for your situation. Sometimes the tax benefit does not close the gap between renting and buying.
Real estate is emotional in India. We grow up hearing that owning a home is the ultimate goal. That rent is wasted money. I think that is oversimplified. Rent buys you flexibility. It buys you a roof without a 20-year commitment. It buys you the chance to invest the difference. For some people, that is the better deal.
When does buying make sense? If you know you will stay in the same city for a long time. If you want the stability of your own place and are okay with the commitment. If you have already built a solid investment portfolio and a house is an addition, not your only asset. Then go ahead. But if you are early in your career, unsure about where you will be in five years, or stretching to afford the EMI, think twice. The numbers might be telling you to rent and invest the rest.