How Much Should I Spend on Rent?

We live in an area we can’t afford. At one point, prior to having only one income, my boyfriend and I were spending roughly a third of our income on rent. This figure is the exact maximum number the U.S. HUD recommends you limit your housing expense to.

If you are like us, and have been living in apartments your whole life, then you are probably familiar with this number: 2.5 times your monthly take-home.  This is what most landlords ask your minimum income to meet: 2.5 times the monthly rent being asked.

According to landlords, you should be making at least $2,500/mo. to afford a $1,000 apartment. Does this mean this is the magic number you should base all of your calculations on? No.

There is a certain degree of risk all landlords are willing to take when searching for a reliable tenant. However, with tough economic times that risk has gone up. To get a good idea of how much you should spend on rent, consider the whole picture.

Will your rent expense leave room for savings? Are you looking at an apartment that barely allows for any sort of savings? Chances are, you can’t afford it. If working just to pay for your rent is a current reality for you, then you are leaving beyond your means.

Consider the Total Cost

Location is a huge factor that affects rent values in a neighborhood. When trying to determine how much to pay for rent, consider the location and all that comes with it. Convenience in transportation, proximity to schools, jobs, shopping, places with high crime rates, everything matters.

Just because that apartment you are eyeing is $200 more than you can comfortably afford prior to considering all of the above, doesn’t mean it’s not a good deal. Let the market conditions guide you to determining your price ceiling for rent. Are you gaining a new convenience of not having to drive to your job? If you are saving $100 on monthly work commute costs and $20 on traveling to grocery stores, who’s to say that $120 can’t go towards your rent instead? I’m not saying you should spend the money you save elsewhere, but consider your entire position by taking a look at your budget to determine where that money can be put to use.

Don’t Listen to Experts, Look at Your Budget

Most experts say you should be living on 25% or less of your monthly take home income, but a recent survey showed that people spend on average 30% or more on rent. Instead of listening to experts or judging how much to spend based on what others are paying, wouldn’t you rather consult the most accurate oracle there is? Your budget is the first place you should look to see what you can and can’t afford. Don’t have one? Consider making a simple spreadsheet that tracks your income and your expenses. Once you break down all of your costs, it should be very easy to see whether your financial goals are being met and whether you need to reduce your rent payments.

For budget suggestions check out the 60% solution and the 50/30/20 fix I wrote about earlier.

Are you spending more than 25% on your rent or mortgage payment? How much more?


  1. My wife and I are right around 20% for our mortgage. I love you you direct people to balance it against their budget to dictate what they should do. You really do need to take a look at the whole picture to determine what’s best for you and your specific situation.

    • I’ve rented my fair share of apartments and learned from mistakes. Sometimes you put up with a place that’s just a bit cheaper, not realizing how much better your life would be if you had only looked at the whole picture. Stress adds up to cost a lot more than a few thousands of dollars one can spend extra for convenience of a much better place.

  2. Well, my wife and me don’t rent anymore, but when we were, we heard that 25% of your income was optimal, 1/3 was okay, but you could go up to 50% of your income. I don’t remember what we did when we were renting, but I ccan say this — your idea about it all depending on personal finances is spot on. People’s non-rent costs are all different and crazy so tehre’s just no way that there could be one cutoff in how much you should spend on rent! so you should spend what you’re comfortable with.

    • Thank you. I’ve never gone as high as 50%, although quite close now on 1 income. It’s definitely not fun but we’re trying to get out of this situation.

  3. I spend about 23% of my income on rent. I know this percentage can easily be less by living in a smaller apartment or with a roommate, but I chose where I live because of its location and thus a higher price came with it. It is very close to the highway and my commute time to work is only 15 min going there and about 20 min on the way home. I had more bad experiences than good ones with roommates in school, so I prefer to live alone at the moment. Although my bf could move in with me, I feel like my apt is not big enough for the both of us (it definitely is though….). We feel like we have to live in a house to be able to live together because there’s more room. So if I’m mad at him, he can hide in the basement/man cave. lol.

    • Oh, I can sympathize with you here so much! I’ve lived with roommates and things just didn’t work out every single time. Living with your significant other is one thing, living with other people is entirely different. Even best friends can’t get along after enough small disagreements over the very minute things.

      Hahaha, I understand completely that people need their space – feel exactly the same! If the place is too small, where can you hide in an argument right?

  4. Apartments have become incredibly expensive in the Metro area that I live. I do know of a lot of people (couples) who got one bedrooms that are only $100-$200 cheaper than a two bedroom and I just don’t understand it. They could nearly double their space by spending 20% more.

    • David, I’ve actually come across this dilemma myself on several occasions. Each time we decided against it because we couldn’t think of any occasion that would justify having an extra room. Instead, we ended up saving the money and taking a vacation. However, I do agree that sometimes an extra $100 can mean a huge difference between living comfortably and having to put up with crap that just stresses you out over and over.

  5. During college, I would often move around in order to take advantage of lower rents. I’ve lived in a lot of buildings! I think it’s also good to take a look at average rents in the area you’re interested in – Craigslist is a good starting point. That will give you an idea of what a “good” price is for the neighbourhood.

    • I was using Craigslist for a while until I found Padmapper. It basically scrapes CL listings and puts them on one large map where you can filter by whatever criteria you like. Then if the preview of the place looks good, you can find the actual listing on Craigslist. Very handy for anyone who’s constantly hunting down new apartments!

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  7. If your rent is nearly half your income than its too high. The consumer American culture has caused a low savings rate, with that includes housing. People have fond memories of the 50s and single income family, well back then you have 4 people living in a 1000 sq ft house. Today that sq is 2200 for the same people.
    Where I live to buy a house we bought a two story house and rent downstairs out. We lose our backyard as we have that for our tenants and I always think twice of how I am walking around. Although we lose a little privacy this has bought our housing cost from 40% of our gross income down to 15%, which allows us to max out our retirement account. If I stuck with a single family home and had total privacy, the cost associated with that house would consume half our income. I would be married to both my wife and my house.

    • Charles, the situation I’m in now is not something I praise. I hate spending close to 50% income on housing, and never in the past have I done this. This is just a circumstance of one income being lost. Thanks for coming here by the way, I haven’t seen you around lately :)

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  9. Hi guys,

    Please guide me … should I rent a fully furnished 350 sq ft or 3 sq meter studio at 1000 dollars per month in a suburb, where it is a 10 min drive from my work? or stay in the current uncomfortable place that I pay 500 dollars per month in the downtown? I don’t have secured salary. My earning is based on commission. The market is excellent nowadays so that i started earning from 20000 dollars to 400000 dollars a month, but the market may fall down overnight and i will wake up without any cent as earning. Hey, I am a miser, but I had very bad experience in being broke for a long time, and i don’t want to repeat that time again. I am single, I had a girl friend. I used to spent 70% of my income on her . She left me when I got hard up. Should I stay in the current place and save money to set up my own business or spend money like before and live my life like other people? I am 29 years old and I just started saving money…
    thanks and regards

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