How Much Should You Spend On Rent?
You should use a rent affordability calculator to figure out how much of your income goes toward rent.
The rent affordability calculator also lets landlords figure out how affordable the rent is for a prospective tenant so It can essentially guide tenants as well as landlords.
The golden rule is to spend around 30% of your income (on rent) when determining how much rent you can afford. Renting out 30% of your income is likely enough to maintain a comfortable standard of living. On a median-class income, 30% of earnings should get you a place to live, i.e. a decent enough place.
Landlords can calculate how much rent they can successfully charge a prospective tenant based on the assumption that the affordable rent is around 30 percent (in some cases 20 percent or even up to 40 percent) of a tenant’s take-home pay.
Let’s explore the different percents and what you may get:
If you choose 30%, you should be able to find an ideal rental property that you are proud to call home while still having enough money to save for other major purchases without breaking a sweat.
If you choose to spend 20% on rent, you may or may not be able to afford a premium rental property, but you will most likely be able to afford a lot more other things because of the money saved on rent.
If you decide to splurge and can go up to 40% and you get a rental property in that margin, you may be able to get yourself an ideal one that meets all of your requirements; however, this may be a financial stretch and may set you back in other ways.
Finally, you know what works for you and how much you are willing to spend on rent. So what is it going to be for you?
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This blog post is not intended to constitute legal or financial advice.