It’s important to find a home that’s in your budget, whether that’s one of the 1 bed apartments for rent available, a large family home, or something else entirely, so figuring out how much rent you can actually afford is essential. It can be hard to figure this out, but we’ve put together this article to help you figure it out.
1. Create a Budget
The first thing you’ll want to do is create an overall budget. Start by figuring out what your total monthly income is. From there, subtract any current expenses. The amount that’s left is what you have after paying your current bills. You’ll use this amount to figure out how much you can comfortably spend on rent each month without putting yourself behind.
2. Use the 30% Rule
You’ll also want to consider the 30% rule. Most professionals recommend that you shouldn’t spend more than 30% of your income on your housing. With that said, this is just a recommendation and many families will be able to comfortably afford more or less. It’s good to have that piece of information, but it all comes down to what you feel like you can comfortably afford each month.
3. Consider the 40 Times Rule
Another thing you’ll want to consider is the 40 times rule. A large number of landlords will require any tenants to have an income that ends up being around 40 times the rent amount, although some will require more. The easiest way to figure out is to take your yearly salary before taxes and divide it by 40. There are always those landlords that don’t use this rule, but it’s good to know just in case one does.
4. 50/30/20 Recommendation
Many people decide to go with the 50/30/20 recommendation. This means that 50% of their monthly income should be spent on fixed costs that don’t change every month, 30% of the monthly income should be spent on daily costs, and 20% of their monthly income should go towards things like paying off debt, an emergency fund or putting some into your savings account.
5. Consider Extra Fees & Costs
It’s important to think about any extra fees or costs, such as deposits, buying new items, and application fees. If you’re working with someone to find a rental, you’ll be charged anywhere from 8% to 15% of what the yearly lease costs. As long as you make sure you have enough to cover these costs, you should be fine to move forward.
6. Start Looking
Finally, you can start looking at properties in this price range and see what you think. If you feel comfortable, you can send a request. If you aren’t impressed with the options you find, though, there’s plenty of things you can do to find other options, such as looking in different areas or figuring out how to increase your budget.
As you can see, it’s actually pretty easy to calculate how much rent you can afford. Now you’ll know which houses are in your range and find the perfect one!