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How Much Rent Can I Afford?

Find your next Apartment
May 28, 2021

For the most part, apartment hunting can be pretty fun. You’ve probably spent your fair share of time browsing through apartment listings, checking out the best apartment rental websites in NYC or in San Francisco, and imagining what it would be like living in your perfect apartment.

Notice how we said, “for the most part”? Well, if there’s one part that’s not so enjoyable when it comes to apartment hunting, it’s trying to figure out whether you can afford rent on a certain unit. Indeed, you’ve also probably sat down and tried to calculate if you make enough money to pay rent on time without straining your finances.

So, how do you determine affordable rent?

Let’s find out!

Spending Responsibly on Rent

When it comes to monthly rent expenditure, the magic number you would generally hear is “30%”. That is, you should only spend a maximum of 30% of your income on your rent so that you’ll have enough left over for other expenses and savings.

The “30% Rule” comes from the National Housing Act of 1937, which set that the maximum rent standard should not exceed 30% of monthly expenditures. This law was signed to help prevent housing costs from overburdening low-income groups, and the idea of putting a cap on rent eventually became the basis for the “30% Rule”.

While the “30% Rule” does sound like a good idea, you will find sources saying that it is already outdated. In fact, a 2015 Harvard Report has found that more than 50% of renters spend more than the aforementioned 30% on monthly rent.

The main reason why it can be argued that the “30% Rule” is outdated (aside from the fact that it is based on a law that is more than 50 years old) is that it does not take individual financial situations into account.

Let’s take a look at student debt, for example. A typical American has around $33,000 in student loan debt, which means that the monthly repayment amount would be around $297.

Now, let’s apply this to someone living in NYC. If a person is earning $30,000 a year (or $2,500 per month), the “30% Rule” means they’ll be paying $750 per month on rent, plus around $146 for utilities. Add in around $127 per month for transportation and $471 for food.

That’s already a total of $1,791, which leaves $709 for other expenses!

As you can see, the “30% Rule” doesn’t make a lot of sense if you’re living on a tight budget in New York. What’s more, it doesn’t make much sense for high-income earners either. If you’re earning $300,000 a year (or $25,000 a month), this would mean that you’re paying out $7,500 a month on rent!

How to Calculate Affordable Rent

So, if the “30% Rule” isn’t a good guideline to use anymore, how should you calculate affordable rent? Here are five factors that you should consider:

Monthly Income

The most important factor to consider is your monthly income. In this regard, you can still use the “30% Rule” as a baseline to determine whether you can afford a certain unit, but you shouldn’t feel like you have to strictly abide by it.

For a more realistic way to budget your money, try using the “50-30-20 Rule”. Under this budgeting principle, you will use 50% of your income for “needs” or living expenses such as rent, utilities, and food. The remaining 30% will go to your “wants” while the 20% goes into your savings or repaying debts.

It is essential that you find a budgeting principle that works best for your individual financial situation.

Savings and Emergency Funds

If you’re looking at dipping into your savings or emergency funds to be able to pay the rent, that’s already a huge red flag that you cannot afford the apartment. Ideally, you should have an account that you use to pay for rent and utilities, and at least one other account that you use for savings and emergency funds. This way, you can easily keep track of your expenditures without compromising your financial goals.


This might sound obvious, but it bears repeating: if you have heavy debt, make sure to account for the monthly payments when choosing an apartment. Remember, you’ll need to add debt repayments to your regular expenditures, and they can add up quickly!


When it comes to housing, there are a few things you need to think about. First, consider the type of apartment you will be renting. Obviously, bigger apartments mean higher rent! To save on costs, try looking for rent-stabilized apartments or getting a roommate.

Second, consider where you are renting the unit. While you are probably aware that there are cheap neighborhoods in major cities like San Francisco or New York, did you know that you find affordable neighborhoods in conventionally expensive locations? Yes, even in places like Greater Boston or Manhattan!

Finally, you should even consider when you are going to rent your apartment. In NYC, for example, apartment rental prices are seasonal, which means that they can fluctuate throughout the year. With a bit of patience and luck, you can score a great deal on an apartment and get it for a much lower price during certain times of the year.


Lastly, take your lifestyle into consideration, particularly how much time you’re going to spend at home. Do you spend most nights out with friends, or travel a lot for work? Then you might want to consider getting a smaller apartment since you’ll be spending most of your time outside. Conversely, if you love having get-togethers or you work from home, this could justify getting a bigger apartment with a large hosting area or a separate home office.

Determining Additional Expenditures

Now that you’ve established how to calculate an affordable monthly rent, the next step is to account for other expenses.


Before signing your lease, check to see which utilities are included in your monthly rent. The basic utilities should include water, electricity, and heating. Some cable-ready apartments also include the cost of cable and Internet.

If the utilities are not included, it’s a good idea to ask the landlord how much your utilities will cost per month on average. You can also ask other tenants in the building.


As with utilities, you’ll need to check your lease to see which amenities are included in your rent. Some of the more common amenities include pet fees and parking fees. If you’re renting a condo or a co-op, you’ll also need to pay for maintenance fees.

One-time Costs

There are some one-time costs you need to consider such as your application fee and security deposit. If you’re renting in New York, you might also need to pay a broker fee due to the NYC Broker Law.

Final Thoughts

When it comes to renting an apartment, the key to responsible spending is managing your spending habits. Don’t be tempted to move your money around just to be able to afford a more expensive apartment, no matter how nice it is. Sure, it might work in the beginning, but you’ll feel the financial strain in the long run.

So, if you don’t want to stress yourself out each month by worrying about the rent, be smart when it comes to choosing an apartment.

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