Q:

How do you determine how much monthly rent you can afford?

A:

Quick Answer

Renters should keep rent costs below 30 percent of their gross annual incomes, states the U.S. Department of Housing and Urban Development. A monthly figure can be determined by dividing guaranteed monthly income by three.

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How do you determine how much monthly rent you can afford?
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Full Answer

This 30 percent figure is predicated on the assumption that a large portion of a renter's monthly income is dedicated to other expenses, such as car payments or groceries, states Quicken. Additional expenses add up quickly, especially when taking utilities into consideration. Basic utilities usually add up to three or four percent of monthly income; introducing cable, Internet, or other premium services quickly raises expenses, according to Quicken.

For example, if a renter's monthly income is $2,210, he should be looking to spend no more than $665 for rent each month. This equates to just a bit under one-third of monthly income and leaves the renter with a financial cushion for food, utilities, transportation and other necessities, states My Apartment Map.

It is possible to dedicate additional funds to rent by cutting cost for variable expenses, or expenses that change month to month, according to Money Crunch. By removing unnecessary subscriptions or creating a stricter budget, renters can safely explore more expensive options for monthly rentals.

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