HomeRentHow Much Rent Can I Afford On My Salary? [Guide]

How Much Rent Can I Afford On My Salary? [Guide]

Woman calculating how much rent she can afford based on annual salary

While finding an apartment that suits your lifestyle is overwhelming, there is something that you should think about before signing the lease contract. And, the most important thing is affordability. You get plenty of options when choosing a house for rent. So, “How much rent can I afford on my salary?”

A simple rule of thumb is that you should spend about 30% of your salary after deducting taxes. Suppose, if your annual income is $50,000, it leaves you with $4166 per month to spend. After deducting the taxes you have about $3270. So, one-third of the said amount is around $981. This is what you can spend when renting a house. 

How much rent can you afford?

Most of the apartment communities that you find around tend to look at whether your annual income is 40 times the monthly rent. Therefore, if your annual income stands at $35,000 after deducting taxes, the maximum amount that you can afford is about $875 per month on rent. 

However, others look for 25 to 30% of your monthly salary or income. So, whatever be the method used to decide monthly rent, in reality, they are two different ways of getting into the same place. You can follow either of the two methods.

Besides, that doesn’t mean that you should look out for an apartment with $875 as rent per month. There are good reasons why you may consider something cheaper than the said price. Or, you can choose something a bit over that price range. It all depends on your lifestyle.

Apart from that, you should know your monthly expenses when renting a place. That way, it gives you a complete picture of what type of apartment you may need. And, you don’t have to worry about your monthly budget.

How much rent can you pay?

If you are someone who needs a place to live and nothing more than that, try to find apartments that fall anywhere between 15 and 20% of what you earn in a month. So, if you earn $35,000 annually, the rent of the apartment will fall between $440 and $590 per month.

But if you think that you don’t want to live a minimalistic life and want to enjoy certain functionalities and features, you can find apartment communities that allow you to rent a home as high as 35% of what you earn in a month. 

Using $35,000 as an annual salary, the rent will be about $1000 per month. However, it is always recommended to arrange for a house with rent in the 25 to 30% range. That way, you can enjoy many features while saving a bit for rainy days. 

Here is a table that might give you an idea.

Yearly salary after taxesMonthly salary Maximum rentPercentage of income

What percentage of your salary should you allot for home rent?

The percentage of your salary allotted for your home rent depends on several factors. Of them, the most important ones are your income level and where do you wish to live. Besides, there are many rules that people adopt to find out a specific ratio of rent against how much they earn in a month.

For instance, you can find most of the online rental calculator starts at 30% as a standard for how much of your salary you need to set aside for the rent. But that doesn’t mean that 30% is the only option available to you. 

As said, the rent per month depends on your lifestyle. If you want to enjoy lots of features and are comfortable paying more, you can pay 40% of your monthly salary. 

  • The thrifty 20%: 

When you spend about 20% of your total earnings on rent per month, you get the chance to spend more on other non-essential things. Also, it allows you to save more. But, spending around 20% on house rent even when you have a regular income means that need to keep yourself away from sleeker apartments. 

And, that becomes important when you are planning to live in a metro city where prices might be higher. However, if you are a person who doesn’t have trouble making a few compromises to save money when it comes to renting a place, the 20% option should be the right choice for you. 

  • The sweet spot 30%

As aforementioned, spending about 30% of your monthly salary on rent is considered a golden rule when you are thinking about how much rent you can afford to pay. When you spend 30% of your monthly salary on rent, it helps you to attain a healthy balance between affordability and comfort. 

If you are having a decent annual salary, 30% should help you get an apartment that you can call home. And, at the same time, you will have some amount of money left aside to manage debt. Or, it can end up on your savings account.

  • The splurge 40%

In general, it is tempting for anyone to spend on rent especially when they believe that they have found their perfect home. So, if you earn more than average income, keeping aside 40% of your total monthly income for apartment rent isn’t a big deal. That way, you can have more living space along with a better location. 

However, keep in mind that spending another 10% comes at a risk. Hence, you must keep an eye on your spending habits. At the same time, make a monthly budget and follow it strictly. 

How to reduce the amount spent on rent:

While many renters in the US find it hard to manage rent. But there are ways through which you can decrease your monthly rent significantly. 

  • If possible, try to live with your friend, other family members, or even your parents for the time being. Also, you can repay them after attaining financial stability from your end
  • Whenever you are looking to rent a place, take enough time and make thorough research about your preferred place. Besides, it is wise to stay away from bad deals
  • You may consider living in an area with a lower population 
  • Try negotiating the terms of the lease contract and the rent
  • Living in a mobile home is another good way of reducing rent. However, it might cost you upfront compared to monthly rent. But help you save more when it comes to long-term planning

Managing rent when the salary isn’t enough:

When you are aware of how much you need for rent, you have to figure out your monthly budget. Because the major portion of your salary goes into rent, it becomes easier for you to maintain a budget for the rest amount. You can apply the most common strategy, which is the 50-30-20 rule. Observing the rule helps you to control your monthly spending while planning for your future.

  1. The 50 – It means that you should aim to pay 50% of your income buying the necessities. And they include the following:
  • Driver’s insurance
  • Cost of groceries
  • Utility bills such as electricity, water, and phone bill
  • Renter’s insurance
  • Health and dental insurance
  • Amount spent on rent

When you figure out how much you need to pay for the monthly rent, you can have a good start on budgeting. That way, it lays the foundation stone needed to evaluate the rest of your finances. Hence, if you are looking for two different apartments: one 25% and the other 40%, you should calculate the difference that will affect the overall monthly budget. 

  1. The 30 – This amount is the income specified for discretionary spending. In general, you should allocate about 30% of your monthly to cover expenses such as dining, entertainment, gas for your vehicle, cost of your hobbies, and so on. However, these are the things that are considered non-essential and you can live without them as well.
  1. The 20 – It is the percentage of income that you should have for your financial goals. So, whether it is about saving money for your retirement, paying off your student or car loan, or saving money for your house’s down payment, 20% of your monthly income is what you need to put aside. 

While the 50-30-20 is an amazing way to make your budget effectively, it isn’t the perfect solution to the financial needs of every person. Keep in mind that priorities tend to change for people earning 30,000 and 80,000 a year. 


Before knowing how much you can afford to pay your monthly rent, it is wise to understand the expenses when renting. That way, you can calculate your monthly income and work through your budget. Besides, it is better to spend anywhere between 25 and 30% of your monthly salary when renting a place.

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