Wondering how much you can afford for rent each month? Here is a simpleguideline to keep your rent affordable and the “Rule of 36” to easily find the answer to “How much can I afford in rent each month?”
1/3 of Your Income Towards Rentto Keep ItAffordable
Typically in the Boston rental market, landlords don’t want to see tenants spending more than1/3of their monthlyincome in rent. Staying at 33% or less of income towards housing is a typicalrecommendationfor soundpersonal financial management, so in the landlords mind, they feel safe if tenants are under that mark. The tenants can pay rent, yet still have enough income left over to actually live their life and not be in a huge money crunch each month to pay the rent. At least that’s the thinking anyway!
To convert this to a simple“rule” we can see that 33% of your monthly income is just another way of taking your annual income and dividing by 36 to come up with a monthly affordable rent. Working backwards to illustrate this:
- If the monthly rent of an apartment is $2,000, then 3 times the monthly rent is $2000 x 3 = $6000 (monthly income required to keep housing payments less than 1/3 of income)
- $6000 x 12 months = $72,000 (annual income required to keep housing payments under 1/3 of income)
- Backtracking withtheannual incomeand monthly rent from above,you can see $72,000 / $2,000 = 36
- Hence the Rule of 36!
Using the “Rule of 36” To Determine How Much You Can Afford in Rent
Bringing it all back together, to use the “Rule of 36” simply and quickly, all you need to do is take your annual income (and that of your roommates), and divide it by 36 to come up with your Monthly Affordable Rent! Simple!
- As an example, if you make $100,000 per year then divide that by 36 toget $100,000 / 36 = $2777 in monthly rent that you can afford
- If you have roommates, just add up your incomes and use the total for your combinedincome, then divide by 36
When looking at it this way, the math is pretty simple, but to make it even easier (don’t worry, you can thank us later! 🙂 ), we created this handy table of incomes and the corresponding affordable rent. To make it even more useful, if you click the affordable rent number, you’ll be taken to a list of Boston apartments on market right now in your price range!
Combined Annual Income & Affordable Rent Chart
Annual Income
$35,000
$40,000
$50,000
$60,000
$75,000
$100,000
$125,000
$150,000
$200,000
$250,000
$300,000+
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Deciding whether to rent or to buy a home?
Maybe a few of these resources may help:
FAQs
Experts recommend renters spend no more than 25% to 30% of their monthly income on rent. So, for example, if you make $60,000 per year, your rent and renters insurance shouldn't go higher than $18,000—or $1,500 per month.
Is 5000 a month too much for rent? ›
Take rent for example. The traditional advice is simple: Spend no more than 30% of your before-tax income on housing costs. That means if you bring in $5,000 per month before taxes, your rent shouldn't exceed $1,500.
How much should you budget for rent each month? ›
Generally, experts recommend spending no more than 30% of monthly pre-tax income on housing. However, it's not always that simple. According to the U.S. Census Bureau, between 2017 and 2021, over 40% of renter households (19 million) spent more than 30% of their income on rent.
How much rent can I afford on 45k? ›
As a rule of thumb, your monthly rent shouldn't exceed 30% of your gross monthly income. This leaves 70% of your gross monthly income to cover other expenses. For example, if you make $50,000 per year and follow the “30% rule,” you'd have $15,000 annually - up to $1,250 per month - to spend on rent.
Can I afford an apartment making $2000 a month? ›
30 Percent Rule
Following the 30% rule, your monthly gross income to rent ratio should look something like this: You must make $10,000 per month to afford a $3,000 monthly rent. You must make $6,667 per month to afford a $2,000 monthly rent. You must make $5,000 per month to afford a $1,500 monthly rent.
Is $1,500 a month livable? ›
Living on $1500 per month in retirement may seem challenging, but with careful planning and smart strategies, it is achievable.
What is the 50 30 20 rule? ›
The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.
How much should my rent be if I make 10k a month? ›
30% Income Rule
According to this rule, multiply gross monthly income by 0.30 to find the maximum affordable rent.
Can you live on $1000 a month after rent? ›
Surviving on $1,000 a month requires careful budgeting, prioritizing essential expenses, and finding ways to save money. Cutting down on housing costs by sharing living spaces or finding affordable options is crucial. Utilizing public transportation or opting for a bike can help save on transportation expenses.
Is the 30 rule outdated? ›
While the world of personal finance provides a percentage guideline for how much of your money should go toward housing, this rule is a little outdated in 2024. Rent prices are down from their peak in August of 2022, but they're still dramatically higher than before the pandemic.
The 50/30/20 rule is a simple way to budget that doesn't involve a lot of detail and may work for some. That rule suggests you should spend 50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt.
What is the 30 rule? ›
The 30% rule advises consumers spend no more than 30% of their monthly income on their mortgage or rent payments, leaving wiggle room in case of unexpected expenses, job loss, family planning, and other goals.
How much should my rent be if I make $18 an hour? ›
Based on the tenants I manage and the thousands of tenant applications I've seen, I'd estimate the maximum rent you could afford on $18 an hour full-time would be about $2200 a month.
Can you live alone on 45k? ›
Depending on their cost of living and debt, a single person can have a nice quality of life with a $45,000 salary.
Can I buy a 300K house with 45k salary? ›
To purchase a $300K house, you may need to make between $50,000 and $74,500 a year. This is a rule of thumb, and the specific annual salary will vary depending on your credit score, debt-to-income ratio, type of home loan, loan term, and mortgage rate. Homeownership costs like HOA fees can also impact affordability.
How much should you make to afford a $1500 apartment? ›
The traditional rule of thumb is that you should try to spend no more than 30% of your gross income on rent. According to this rule, you should be making $5,000/month to afford a $1,500 apartment. With a 40-hour workweek, this works out to $28.85/hour. Should you follow the 30% rule blindly?
Is $1,000 a month good for an apartment? ›
On $1,000 per month, a reasonable rent cost would be around $300 to $400 per month. If you're willing to live at home with your parents or other family and they are willing to have you, you might be able to eliminate housing costs altogether.
Is $2000 rent too much? ›
40x Rent Rule
To find maximum rent using this rule, divide the household's annual gross income by 40. For example, a household that earns $80,000 per year can afford a maximum monthly rent of $2,000 (80,000 ÷ 40 = 2,000).
Typically in the Boston rental market, landlords don’t want to see tenants spending more than1/3of their monthlyincome in rent. Staying at 33% or less of income towards housing is a typicalrecommendationfor soundpersonal financial management, so in the landlords mind, they feel safe if tenants are under that mark. The tenants can pay rent, yet still have enough income left over to actually live their life and not be in a huge money crunch each month to pay the rent. At least that’s the thinking anyway!