How rent can you afford? Learn how much you can responsibly spend on rent

Shopping for a new apartment is stressful: You spend hours flipping through pictures online, attend open houses or take virtual tours, and have to balance factors like location, size, and amenities. The one thing you can be sure about is your budget...right?

Conventional wisdom says you should spend 30% of your income on rent, but according to a 2015 Harvard report, more than half of renters go over that number. (That’s probably because the 30% rule is more than 50 years old—more on that below). 

It turns out that the question, “How much rent can I afford?” requires an incredibly personal calculus to answer. Here’s how to determine how much rent you can actually afford, with a budget based on your individual needs and financial goals.

A brick building with a bright blue apartment door
A brick building with a bright blue apartment door

Table of contents

How Much Rent Can I Afford?How to determine the total cost of movingMaking your rent work with your budget

How Much Rent Can I Afford?

Here are some of the most important factors to consider when budgeting for a move.

  1. Your monthly income. Most financial experts recommend spending around 30% of your gross monthly income on rent (note that gross is different than net income—gross is your income before tax). Multiply your gross monthly income by 0.3 to find 30% of your income. If this number feels unrealistic in your housing market, that’s because the 30% rule is actually pretty outdated—it originated in 1969, and hasn’t been updated since. It also doesn't hold up at especially high or low income levels. (At higher income levels, spending 30% on rent could be more lifestyle creep than necessity.) Simply take it as a directional guide away from overspending on rent.  

  2. Your savings accounts. Savings is almost as important as income. Make sure you have enough in the bank to cover your security deposit and other move-in costs without having to dip into your emergency fund or compromise your financial goals.  

  3. Your debt. Even if your income is high, you may need to spend less on rent so that you can save some money for student loan payments or credit card debt. 

  4. The housing market. You can set a great rent budget for yourself based on your own financial situation, but it won’t matter if you’re moving into a housing market that’s much more expensive than what you anticipated. Research the average rent costs in your neighborhood to come up with a more realistic budget.

  5. Your lifestyle. Your rent budget should also take into account personal factors, such as the amount of time you spend in your home. If you work from home and have a big home office set-up, that could justify more expensive rent. If you travel frequently, you might want to spend less on rent. Although your financial situation will set the hard limits for how much you can spend on rent, your lifestyle can help you decide how close you can get to the recommended 30%.

2 colorful apartment doors side by side

How to determine the total cost of moving

Rent isn’t the only thing you need to budget for when moving to a new place. Before you sign a lease, make sure you’ve considered all of your move-in costs:

  • Utilities: If utilities aren’t included in your rent price (they usually aren’t), ask your landlord which utilities you’ll have to pay each month, and about how much they usually cost. Then, fact-check them by researching the averages for your city or neighborhood online. Add this information to the total rent cost when comparing apartments and budgeting. 

  • Security deposit. Most landlords require a security deposit equal to one month of rent before you can move in—sometimes more. Find out exactly how much you’re expected to pay, and make sure you can cover it without dipping into your emergency fund. 

  • Fees. Make sure you’re aware of any additional fees associated with your new place: a one-time broker’s fee, monthly maintenance fee, additional costs for parking or pets. Add any fees to the rent price to get a more accurate idea of how much you’ll need to budget for rent each month. 

  • Furniture. Whether you’re driving your furniture in a U-Haul, shipping it across the state, or buying all new stuff, furniture is a major expense to moving. How much you need to budget for this depends on the size of the space you’ll be furnishing. Shared apartments with furnished common spaces reduce this expense; whereas getting your own one bedroom increases it.

2 friends sitting on an apartment rooftop

Making your rent work with your budget

If you already have a solid personal budget, plug the new numbers into your existing budget and see if you’ll need to make changes to account for your new rental. 

  • If you don’t have a budget already, try the 50/30/20 rule. The 50/30/20 budget rule is a popular rule of thumb for understanding your budget that suggests spending 50% of your net income on living essentials (including rent), 30% of your net income on nonessentials, and 20% of your net income on saving for your financial goals. Your new rent shouldn’t push your spending on essentials above 50%.

  • Don’t expect to change your spending habits. It can be tempting to move numbers around in your budget to make room for a more expensive rental, but you’ll probably regret it. If you don’t want to stress about making rent each month, make sure you can afford your new home while maintaining your current spending habits. You’ll be much happier if you have some money left each month for your financial goals, so be conservative with your rent budget.

Looking for a new home that fits within your budget? Bungalow offers private rooms in shared homes in 11 cities nationwide. Bungalow rooms are less expensive than solo living options like studio apartments, and our homes come with furnished common spaces and stocked kitchens, reducing your move-in cost. Find a room for rent in a Bungalow home here.

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