How Much Rent Can I Afford? Use This Rent Calculator
When you are looking for an apartment there are all kinds of rent affordability calculators out there. Sadly, most of them fall short by our standards. We will get into that shortly. When you are figuring out your monthly rental calculation you need to take into a few things that just aren’t seen on other rent calculators. So let’s dive into what you need and then you can fill out the rent calculator at the bottom and get a better grasp on your finances.
How do rental affordability calculators work?
Most of the other calculators use your gross monthly income and take your debts into account. From there they use a percentage of your gross income and less any monthly debt payments to get your monthly rent amount.
This is a good start but, in my opinion, these income on rent calculators miss the mark.
The issue with this is that using your gross income and not what you actually take home, which as we all know after our first pay check, we take home a lot less than what we earn. That’s why we made this apartment affordability calculator, to help you get a clearer picture. It works for renting a house or renting an apartment.
The rule of 40
The quick calculation most other rent budget calculators use is the rule of forty. Using this rule of thumb they take your gross annual income, and then divide it by 40. That gives you your monthly rent amount. So if you are making $40,000 a year, then your rent can be $1,000 a month.
This is a good start but it doesn’t go deep enough.
Why? Because it doesn’t take into account things like your after tax income, your financial goals (are you planning on being a lifelong renter or is this a temporary choice), and other things like rent increases. This is a good quick way to start but before you go apartment hunting you should consider.
How much rent can I afford based on salary?
If you are on a salary, here is a quick chart of what your rent would be using the rule of 40.
How much rent can I afford $40 000 salary?
$40,000 = $1,000/ month
How much rent can I afford $50 000 salary?
$50,000 = $1,250/ month
How much rent can I afford $60 000 salary?
$60,000 = $1,500/ month
How much rent can I afford $70 000 salary?
$70,000 = $1,750/ month
How much rent can I afford $80 000 salary?
$80,000 = $1,000/ month
Can I afford $1000 rent?
Using the rule of 40 if you are making $40,000 a year you should be able to afford a rent of $1000, of course other things can influence this like your debt servicing amount and how much you take home in net salary. This is a good place to start but please don’t use this as the basis for picking a living space. Rent costs can go up and your income level may not rise with it. It’s much better to have a budget and work around that.
One of the things this number doesn’t consider is the type of renter you are. Are you a frugal renter (could do with a shared one bedroom), one of those fancy lavish renters (only looking for the dream apartment and nothing else will do), or are you more of a standard renter who doesn’t need a lot but definitely wants certain things in a place.
Rule of 40 Rent Calculator
While this method is quick, it can put you in a bind depending on your living expenses. There is a better way and we have it our rent affordability calculator to help you find out what you can afford for your apartments rent. Essential this is the start to answer the question, “How much rent can I afford?” But if you want to know a more accurate number of your apartment affordability then read on to get a better idea.
What Costs You Need to Consider in Your Rent Affordability
There are several monthly numbers you should consider here they are so you can get a better grasp of how much you can safely afford in rent every month. Our rent budget calculator will help you with this, but you will need to think of these things when it comes to your budget.
This is the amount of money you take home from your job on a monthly basis. If you are paid infrequently or have a work set up where it is hard to estimate how much you will be earning, it is best to assume a lower amount than a higher one.
Look at it like it’s a base income amount for you every month. This makes using a rent budget calculator simpler and also being able to make your payment every month a lot easier!
This is where you put all of your monthly debt payments. This can be your car loan, your personal loans, student loans, credit cards etc… Any kind of debt payment that you make goes into this amount (It’s also good to know that many landlords will ask about this amount, as they don’t want to rent out a place to someone who cannot afford to make rent every month).
These are all the amounts that go into your living. Think of it as a catch all. In here you can enter your food costs, entertainment, subscriptions, anything that you spend money on in a given month.
Enter in all of your costs of getting around. This can include your transit passes, car insurance, maintenance, gas, repairs. If you have anything related to getting around it goes into this category.
As a renter it’s a good idea to have insurance on your possessions. Your landlord will have insurance on the building but it likely won’t cover your stuff should anything happen to it. You can ask your landlord about this. Usually rental prices don’t cover insurance. So for now enter in an amount to give yourself some room in your budget. Alternatively you can add this into your rent payment calculator as a cost of renting. But it’s better to think of it in advance.
A good number to start with is 10% of your income, but whatever you do make sure you are putting away some money for your retirement. You’ll thank us down the road. A good retirement savings calculator can help you find what you need to start saving now.
This is a good idea to have. In your place, you likely don’t want to be scraping by. That’s were reserves come in handy. Whether its for travel, or for an upcoming big repair, having some room in your budget every month to set things aside will give you peace of mind and help you sleep better.
The other amount is for any other items you think you may have forgotten. You never want to live close to the line and renting a place means things are going to cost more. So think of the things you may have forgotten. Will you want a pet, add new subscription services, parking spot, gym memberships, use this amount as your last attempt to make sure you have all of your financial items down.
If you find that you don’t have enough money you can adjust the numbers in your financial snapshot. Lower your savings and discretionary expenses, play with a student loan calculator and see if you can lower your minimum debt payments. Doing these things is part of the way you can find a rental price that suits you best.
How the Monthly Rent Affordability Calculator Works
Our rent calculation formula is based on your income less all of your other expenses. Once you have that, you are set to calculate your rental price range based on your actual financial situation.
This means that you will have $0 left over at the end. Of course that means this rent number is more of a maximum amount than anything else but you can compare to the Rule of 40 to see how close you are. As an added bonus, by taking the time to get your numbers together you will be in better mental shape to rent a place because you will have your numbers together.
This process can help you adjust for cost of living changes, rent increases and other household expenses you may have. Plus it allows you the freedom and flexibility to make extra debt payments if you are inclined, or leave your payments alone and stay at your minimum debt payments.
Use the calculator below to see what your possible rent will be. You can see our household and apartment essentials checklist too when you’re ready to move. .
Rental Apartment Affordability Calculator
Before you own a home, you will likely need to rent a place. This Rent Affordability Calculator is an easy way to calculate how much rent you can afford based on your take home income and see how much money you have after all of your expenses.
How Much Rent Can I Afford?
By now you will notice that the amount of money you get qualified for with rent may not line up with how much you actually have to spend in rent.
That’s pretty normal.
All that means is that you need to budget. Using our rent calculator is a great way to start doing that. By spending some time with our rent calculator you will have a better understanding of what rent you can afford and what that means for your overall budget.