Rent Calculator – How Much Can I Afford?
Understanding how much you can afford to pay for rent on your salary and how to use a rent calculator is critical for first-time renters starting their apartment or house rental search. It’s best to learn how to calculate the rent by hand but we have made it easier with this rent calculator below.
Calculating Rent – How Much Rent Can I Afford on My Salary?
Renters can learn more about how to create a budget, a helpful blog post when trying to determine how much rent you can afford. Most industry professionals will tell you a good rule of thumb to use when you are trying to calculate how much rent you can afford on your salary is around 30 percent of your annual income. The quick way to determine the maximum rent to income amount is to be sure your annual income is 40 times the monthly rent or higher.
This can also be a combined annual income if you have roommates. Landlords and property managers typically use this rule of thumb because it leaves enough income to cover other month expenses like rental utilities, renters insurance, car payments, groceries, etc. Here is the formula of how to calculate an affordable monthly rent amount:
Total Annual Income/40 = Maximum Monthly Rent (or how much you or all of your roommates can afford to pay).
Rent Calculator – How Much Rent Can I Afford to Pay?
If your annual salary is $80,000, divide that number by 40 and $2,000 is the maximum monthly rent you should pay.
1. $80,000/40 = $2,000
Dividing by 40 is the same thing as taking 30 percent of $80,000 which is $24,000. Dividing $24,000 by 12, you get $2,000, the same monthly amount of rent you can comfortably afford.
1. $80,000 x .3 = $24,000
2. $24,000/12 = $2,000
If you don’t want to calculate the rent by hand, we have provided this rent calculator below to make it faster for you.
Starting Your Search
Referring to a rent calculator can eliminate any differences of opinion in the affordable monthly rent amount if you have roommates. Once you have answered the question of “How Much Rent Can I Afford?” you can start your apartment or house search in the right price range. There are some easy ways to find a place to rent online, most first-time renters start with Craigslist.org. ApartmentList.com is another great place to start looking and it has a comprehensive database of apartments for rent as well as reviews and helpful information about the neighborhoods.
Don’t Overpay on Monthly Rent
Once you have calculated your rent to income, a cool way to know if the rent amount is accurate (so you aren’t paying too much) is to use Rentometer.com. By entering in the address and monthly rent amount, it allows you view the comparable houses or apartment for rent and the rent amount in the areas you are looking. It’s always smart to know if you’re paying the fair market value for monthly rent, so it’s worth spending some time so you feel confident in the amount you agree to pay.
Hopefully the rent calculator and tips to determine how much rent you can afford will help a lot of first-time renters to make the renting process much easier!
By Debbie Hill, join me on Google+