How Much of My Income Should Go Toward Rent

Happy African-American woman moving into a new homeBeautiful African-American young woman carrying her belongings while moving into the new home.

Looking for a new place to live can be a stressful experience, and figuring out what you can afford to spend on rent can be one of the most challenging aspects of the process.

How much you can afford to pay depends on how much you earn every month, your debt payments and other expenses, and your future financial goals. Here's what to keep in mind as you search for a place to live.

How Much Rent Can You Afford?

There are a few ways to determine how much you can afford to budget for monthly rent payments. The approach you take depends on your own personal preferences and financial situation. There's no one-size-fits-all way to budget, and you might end up putting your own spin on one of the following methods.

50/30/20 Rule

One popular budgeting method is based on the 50/30/20 rule. With this approach, 50% of your monthly income goes toward necessities, 20% goes toward debt payments and savings (including retirement), and the remaining 30% is set aside for discretionary and lifestyle-related expenses.

You start by counting up all of your typical monthly expenses and placing them in one of the three categories. Because rent falls under necessary expenses, here's how you'd determine what you can afford:

  • Start by figuring out what 50% of your monthly income is. For instance, if your take-home pay is $5,000, you can budget $2,500 per month for necessary expenses.
  • Calculate the percentage of your income that you're currently spending on other necessities. Don't include existing rent payments, but keep in mind things like utilities that you'll also have to pay at your new place.
  • Subtract the total amount you're spending on other necessary expenses from your 50% figure. This number is what you can afford to pay in rent each month. So, if 50% of your monthly income is $2,500, and $700 goes toward other (non-housing) bills, you should aim for a rent payment of $1,800 or less.

30% Rule

Alternatively, you can follow the 30% rule, which states that you should try to spend no more than 30% of your gross monthly income on rent. So if your salary is $5,000 per month, your target rent payment would be $1,500 or less.

Holistic Approach

Rules of thumb can help people make better financial decisions, but they're not always a good approach, especially if you have very specific needs or goals.

If you want to take a more holistic approach, take a look at your existing income and expenses, then also consider how much you want to put toward your financial goals, which can include retirement and education savings, a vacation fund, a home down payment or anything else you wish.

By doing a deeper dive into your financial situation, you'll get a much better idea of how much you can afford to pay in rent while also ensuring you can meet your other obligations and making meaningful progress toward your other financial goals.

Regardless of how you approach determining how much you can afford, it's important to know the average cost of rent in the area you want to live, so you can manage expectations.

Create a Budget and Account for Expenses

As previously mentioned, creating a budget is a key step in finding out how much you can afford and ensure you don't overspend on housing. It will also help you keep up with other monthly expenses.

To start, write down what you earn each month. If you're a business owner or your hours aren't consistent, take an average income from the last three to six months.

Then, identify all of your expenses from the past few months and categorize them so you can determine how much of your income you spend every month and where it's going. Your budget will help you not only find out how much you can afford in rent but also how much you can put toward other important financial goals.

In addition to rent, you'll need to account for other housing-related expenses. For example, many landlords require renters insurance, which covers your personal belongings if they're damaged or stolen. According to the most recent report by the National Association of Insurance Commissioners, the average annual premium for renters insurance was $180.

Depending on your situation right now, you may also need to spend some money on furnishings to make your new place feel like home. Take some time to research what you'll need and how much it will cost, so you can plan for it. Buying furniture secondhand or accepting hand-me-downs from friends and family can help you reduce these costs.

How to Save Money on Rent

Regardless of how much you can afford to spend on rent, it's a good idea to take some time to consider ways you can reduce your monthly cost:

  • Move in with a roommate. Living with someone else isn't always ideal, but it can cut your rent expense in half every month, or even more if you're comfortable living with two or three people.
  • Shop around. When searching for a place to rent, you'll typically find several options at various price points. In some cases, one apartment, home or condo may cost less than a similar one. Do your due diligence and shop around to make sure you get the most value out of your lease.
  • Look for move-in specials. Some landlords may offer special promotions to encourage new tenants to move in. For example, you may be able to get some or all of the deposit requirement waived, or you could get a discount on your first month's rent. As you hunt for a new place to live, keep an eye out for these money-saving specials.
  • Sign a longer lease. Landlords place a lot of value on stability, so you may be able to negotiate a lower monthly rent in exchange for a longer lease.
  • Know when to move. Landlords have a tougher time finding new tenants during the winter, which means they may be more willing to give you a break on rent. In contrast, summer months come with high demand for rentals, so landlords may tend to charge higher rents.

What to Do if You Need Help Paying Rent

If you're struggling to pay rent where you are now, you may face eviction if you're not careful. Fortunately, there are some ways to get relief from rent costs:

  • Talk to your landlord. Reach out to your landlord or property manager to find out if they'll offer you some kind of break. Depending on the situation, you may be able to get forbearance or reduced rent for a month or two while you get back on your feet financially. On the flip side, some landlords may not be willing to work with you at all. Either way, it's best to start this process sooner rather than later.
  • Look for financial assistance. Many organizations are designed to help people who are having a hard time with rent payments. You can search and compare programs in your area through the National Low Income Housing Coalition. You may also look for financial assistance for other expenses, which can free up some cash flow for rent. Websites like and can help you know where to start.
  • Brush up on your rights. Tenant protection laws can vary based on where you live, but they can help you in certain situations. The U.S. Department of Housing and Urban Development provides a resource that can help you learn more about tenant rights where you live.

Improve Your Credit for a Better Chance of Getting Accepted

It's common for a landlord to run a credit check when someone applies for a lease. While they can't view your credit score, they'll be able to see your credit report and the information that influences your score. If your credit is less than stellar, you may have a hard time getting accepted for the apartment, home or condo you want, especially if other applicants have better credit.

Check your credit score to get an idea of where you stand, and review your credit report to see where you can make some improvements. Depending on your situation, it may mean paying down credit card balances, getting caught up on late payments, disputing inaccurate information or any other number of things.

If you're currently renting, it's important to stay current on your payments and leave on good terms. Evictions themselves won't show up on your credit report, but collection accounts associated with housing will. Also, your rent payment history and prior evictions may be found on other reports landlords may look at when reviewing your application.

Improving your credit score can take time, but the sooner you start, the more time you'll have to make an impact by the next time you apply for a lease.