How To Calculate How Much Rent You Can Afford

Make sure you sit down and add up all of your expenses when you are trying to figure out how much rent you can afford.  When you are looking for a place to rent you will want to remember that most landlords will not let you rent their property unless you make at least three times the monthly rent.  You also want to keep in mind that most people cannot afford to spend over 30% of their income on rent if they want to be able to live a comfortable existence in other aspects of their lives.

In adding up your monthly expenses, you may find that you could afford to spend a little more or a little less than the recommended percentage; this will depend on how much you are actually making.  If you are only making $2,000 a month after taxes, and you have a car payment of $500 a month with insurance of $150, you may not be able to afford that $600 in rent.  Remember to take utilities into consideration, and of course you will have to eat and buy gas for your car.  You may really want to consider a roommate in this situation.

Now, if you are making $5,000 a month after taxes and had the car payment and insurance you would probably still be able to afford up to $1,500, which would be 30% of your take-home income.  In this case, you would maybe even be able to afford to rent a place for even a little more.  I think you are beginning to see that there is really no set rule on how much rent you can afford.  These basic guidelines are primarily to give you an idea; then, you have to add that personal touch - taking utilities, entertainment expenses, and the like into consideration - to get a final result.

It is always a good idea to have savings of 10% of your yearly income available for a down payment before you commit to any rental agreement.  This savings will help you get the rental home or apartment that you wan, and the landlord will be more likely to believe that you can afford to pay your bills.  You should still continue with your saving habits after you obtain your new residence, as we all have those occasional rainy days.  Certainly you know that how much rent you can afford is a small part of the big picture, and you must consider that big picture before you make the final decision. 


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