Most rent versus buy arguments in India are settled by sentiment and then justified with a spreadsheet. The arithmetic is worth doing honestly first, because in Mumbai in 2026 it points somewhere specific, and the reasons to override it are real but they should be named rather than smuggled in.
Key takeaways
- Gross rental yields are near 3.84 percent in Mumbai and 4.35 percent in Pune, against an all-India average near 5.16 percent (Q2 2026).
- Home loans cost roughly 7.25 to 8.45 percent at SBI as of September 2026, so the cost of borrowing sits well above the yield on the asset.
- That gap, roughly four percentage points in Mumbai, is the annual cost of owning rather than renting before any appreciation.
- Buying wins when appreciation plus forced saving outruns the gap, or when the non-financial value of security and control is worth paying for. Both are legitimate; only one is arithmetic.
The two numbers that settle most of it
A flat is an asset that throws off rent. The gross rental yield is the annual rent as a percentage of what the flat costs. A home loan is money borrowed against it at a stated rate. Set those two beside each other and the structure of the decision appears immediately.
Source: SBI published home loan range, September 2026; gross rental yields, Global Property Guide, Q2 2026
In Mumbai you borrow at roughly 8 percent to hold an asset that yields roughly 3.8. The difference is not a rounding error; it is about four percent of the property's value every year, and it is the price of ownership before a rupee of appreciation.
Pune's gap is narrower but still real. In none of the cities Global Property Guide tracks does the gross yield reach even the bottom of SBI's range.
The comparison in full
| Renting | Buying with a loan | |
|---|---|---|
| Monthly outflow | Rent only | EMI, maintenance, property tax, society dues |
| Upfront cost | Deposit, refundable | Deposit plus stamp duty and registration, not refundable |
| Exposure to price falls | None | Full, and geared by the loan |
| Exposure to price rises | None | Full, and geared by the loan |
| Forced saving | None | The principal portion of every EMI |
| Flexibility to move | High, notice period | Low, a sale takes months |
| Security of tenure | Landlord's decision | Yours |
| Cost of being wrong | A move | Stamp duty, brokerage and a sale in a market you did not choose |
Two rows in that table do most of the work and they pull in opposite directions. Forced saving is the strongest financial argument for buying that has nothing to do with appreciation: an EMI's principal component is money you would probably not have saved otherwise, which is why owners often end up wealthier than renters who intended to invest the difference and did not. Exposure, geared is the strongest argument against: a 20 percent deposit means a 10 percent fall in price is a 50 percent fall in your equity.
An analogy: the season ticket
Renting is buying a ticket each month. Owning is buying a season ticket with borrowed money, where the season ticket's resale value floats.
The season ticket is the better deal if you will use it for long enough and if its resale value holds. It is a worse deal if you move cities in three years, because you pay a fee to get in, a fee to get out, and you carry whatever the resale market does in between. The question is not which ticket is cheaper per journey. It is how many journeys you are confident of making.
The break-even, worked
Take a Rs 1.5 crore flat in Mumbai with a 20 percent deposit, so a Rs 1.2 crore loan over 20 years at 8.45 percent.
- EMI: about Rs 1,03,800 a month.
- Rent on the same flat at a 3.84 percent gross yield: about Rs 48,000 a month.
- Ownership extras (maintenance, society dues, property tax): call it Rs 10,000 a month, which is conservative for a flat at this price.
So the monthly cash difference is roughly Rs 66,000 in favour of renting, and the buyer has also paid stamp duty and registration on day one, which on Rs 1.5 crore in Mumbai runs to several lakh and is not recoverable.
What the buyer gets for that Rs 66,000 a month is the principal repayment inside the EMI, which in the early years is the smaller part of it, plus the whole of any price appreciation on a Rs 1.5 crore asset. The break-even therefore depends almost entirely on the appreciation rate, and nobody knows what that will be. What you can do is state the assumption out loud: if you need 6 percent a year for the purchase to beat renting, write that down and ask whether you believe it.
Run this arithmetic with your own three numbers rather than these: the actual rent on the actual flat you would otherwise rent, the rate your lender has actually offered you, and your real maintenance and society dues. The city-level yield is a market statistic and can be a long way from a specific building. The point of the exercise is not the answer; it is that most people have never seen the Rs 66,000 stated as a monthly figure.
The costs that only appear on one side
The monthly comparison above understates the buy side, because buying carries a set of one-off costs that renting does not and that never appear in a yield calculation.
Stamp duty and registration fall on registration day, in cash, and are not financeable. On a Rs 1.5 crore agreement in Mumbai they run to several lakh, and they are gone whether the flat rises or falls. The full sequence and what you carry to the counter is in registration day at the sub-registrar, with the state-wise rates in stamp duty and registration charges.
GST, if the flat is under construction. Five percent of the consideration on a non-affordable under-construction purchase and nil after the completion certificate, which is one of the largest single differences between two otherwise identical flats. GST on a flat purchase explains which side of the line a given project sits on and why the same tower can be taxed differently in March and September.
Brokerage, on the way in and on the way out. Typically charged on both transactions, and the exit one is easy to forget when you are modelling a five-year hold.
Spread across a five-year holding period, those one-off costs can add the equivalent of several thousand rupees a month to the ownership side of the comparison. Spread across twenty years they are close to noise. That single sentence is why the holding period is the first question in the framework below rather than the last.
Where the affordability index fits
Knight Frank's Affordability Index puts the EMI on a typical home at 69 percent of household income in MMR and 28 percent in Pune in H1 2026, against a 50 percent threshold that lenders treat as the edge of underwritable. That is a second, independent reason the Mumbai arithmetic is hard: it is not only that the yield does not cover the loan, it is that the EMI does not comfortably fit the income. How to read that index, and why it held steady in 2026 while prices rose, is worth understanding before you use it either way.
Pune at 28 percent is a genuinely different decision. The yield gap is narrower and the ratio is comfortable, which is why the same household can reasonably rent in Mumbai and buy in Pune without being inconsistent.
Priya and Arjun price the gap honestly
Priya and Arjun had been renting in Pune for four years and treating it as a failure of nerve. When they built the comparison properly, two things surprised them. The monthly gap was smaller than they expected, because Pune's yield is closer to the loan rate than Mumbai's. And the forced-saving argument, which they had dismissed as a rationalisation, turned out to describe them accurately: the difference they had "invested" over four years was mostly still in the current account.
That second finding, not the first, decided it. They bought, and they bought in the knowledge that the case rested on their own behaviour rather than on a forecast. Names and numbers in this story are illustrative.
The framework: six questions
- How many years are you confident of staying? Under five, the transaction costs alone usually settle it for renting.
- What is the actual rent on the actual flat? Not the city yield. The flat.
- What appreciation rate does your purchase need to break even, and do you believe it? Write the number down.
- Would you really invest the difference? Answer this from your last three years of bank statements, not from intent.
- Can you carry the EMI at a rate two percentage points higher? The 2026 index is a rate position, and rate positions reverse.
- If it is under-construction, what does the promoter's record say? Paying rent and EMI together for three unplanned years is the single largest risk in the buy case, and it is the one you can actually research.
That last question is the only one in the list the filings can answer, and they answer it well. The free project pages carry every covered project's registration status, where construction and sales stand and disclosed litigation, and the Rs 499 buyer report sets out one project's delivery record, the promised date, every extension and the promoter's record on earlier projects, in one document.
The 60-second summary
You borrow at about 8 percent to own an asset yielding about 3.8 in Mumbai and 4.35 in Pune. That gap is the cost of ownership before appreciation, and on a Rs 1.5 crore flat it is roughly Rs 66,000 a month against renting. Buying beats renting when appreciation plus forced saving covers the gap over your actual holding period, or when security and control are worth paying for. Both can be true. Say which one you are relying on.
Methodology and sources
- Gross rental yields: Global Property Guide, India rental yields, Q2 2026 (Mumbai 3.84 percent, Pune 4.35 percent, all-India 5.16 percent). Gross, before maintenance, vacancy and tax.
- Home loan rate range: State Bank of India published home loan rates, September 2026, 7.25 to 8.45 percent depending on credit profile.
- Affordability Index: Knight Frank India, Affordability Index, H1 2026.
- EMI figures are computed on a standard amortisation formula. Rent, maintenance and appreciation figures in the worked example are illustrative assumptions, stated as such.
Evaluating a project right now?
The ReraGenie buyer report reads every filing for one project and sets out the red flags, the checks that came back clear and what to verify before you book, each fact with its filing date. Rs 499, one time.
See the buyer report