It is advised to spend 25-30% of your salary on rent. This indicates on a $60k salary you should spend $1250-$1500 on rent.
However, the real-world situation is much different. Moreover, how much rent can i afford on 60k will largely depend on many other financial factors.
So, in this post, I am going to answer, how much of my income should I spend on rent, What percent of your budget should go to rent, and What affects how much rent I can pay? And many more related questions. So stay here with me till the end.
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How Much Of My Income Should I Spend On Rent
You should spend 20%-30% of your income on rent. But it largely depends on your financial situation and location. If you are in student debt or any other debt, the lesser the rent the better.
According to the famous rule of thumb 30% rule, you should spend 30% of your income on rent. However, this rule is quite old and was not made considering the recent financial situation. This rule roots back to 1980s public housing regulations, which states
Rent should be capped at 30% of the renter’s income.
However, the situation is much different now. There is high student debt along with high living costs. Moreover, rents are higher than ever too. According to a 2015 Harvard study,
Almost half of US household pays more than 30% of their household income in Rent.– Havard Reasearch
So, the 30% rule or any other rule does not work in the current situation. But it’s financially healthy to keep your rent under 30% of your income. Otherwise, you might not get enough money for other living costs.
Now let’s help you a bit. Apart from keeping your rent below 30% what are the things you should consider?
What Affects How Much Rent I Can Pay?
There are several factors that can affect how much rent you can afford to pay. Here are some of the most important ones
Your monthly expenses play a vital role in determining your rent. Though your shelter is in the four walls of budgeting. However, you should not pay a higher rent at the cost of other necessities like food, medicine, or transportation.
So, always try to keep your necessary expenses like food, transportation, bills, and rent at 50% of your income.
Debt is another factor to consider. If you have a high personal debt then you should focus on paying the debt first. As rent is one of the big expenses so cutting costs in it can help you get rid of debt faster.
Your budget rule also plays a role in choosing rent. As you make your budget according to your financial goals. So, choose a house that goes with your monthly budget. It will help you to reach your financial goal faster.
The cost of rent can vary widely depending on where you live. For example, according to a rent.com study,
The average rent in New York City is $3199 for a studio apartment while the average rent is only $662 in Springfield.-Rent.com
So, the city or town you live in will play a vital role in determining your rent. Because you have no other option but to live in your city.
Your family size is also important in determining your rent. If you are single you can easily cut costs on rent or live in a shared apartment in any neighborhood you want.
However, if you have a family then you can’t do that. You need to think about the safety and well-being of your family. So, determine the rent according to your family size.
Here are the factors affecting your rent.
How Much Rent Can I Afford On $60k
In an ideal situation, you can afford $1,250-$1,500 in rent on $60k take-home pay. However, if you live in an urban area where rent is high then you can go as high as $1,800 for rent.
Considering you are a w2 employee, $60k is your income after taxes, health insurance, and retirement savings. Then your monthly take-home income is $5,000. As a result, 25%-30% of your income is $1,250-$1,500
Is $1500 Rent Too Much?
$1500 Rent can be reasonable for people who live in urban areas and have a $60k or more yearly income.
Whether $1500 rent is too much or not depends on several factors such as
- Your financial situation
- Family size and
- Your overall budget.
If you consider all the above factors, you will find out whether $1500 is too much for your financial situation or not.
Location-wise, $1500 rent may be considered reasonable for a decent living space in high-cost areas, while in other areas, it may be considered very expensive for a similar property.
So, If your income is high enough and you can afford it without compromising your other financial obligations, then $1500 rent may not be too much for you.
Here is how it works. You just need to put your monthly salary and put in the percentage of your salary which you want to use as rent. So according to the rent calculator, I will use 30% of my salary on rent. So, if I make $53,000 a year how much rent can I afford is $1,325.
Do You Have To Make 3x The Rent?
It’s a common practice among landlords that tenants have to earn at least three times the monthly rent. However, it’s not mandatory and not a legal requirement.
In case, you have a good credit history, a low debt-to-income ratio, and a good history with your previous Landlords. Then you won’t have to have an income of 3x the rent.
The most important thing is you have to prove that you are financially responsible and able to meet your rent obligations.
However, if your landlord does not agree with you on the income requirements, you should provide additional documentation, such as proof of savings, an income statement, or, investment proof. Moreover, paying a good advance can also help you in this situation.
So, if you are having trouble finding how much rent you should be paying check out the below answers. Here are some rent estimations for different salary ranges based on the 30% rule.
How Much Rent Can I Afford On 90k
At a 90k take-home yearly pay, you can afford $2250 on rent monthly. It’s based on the 30% rule. However, you should try to keep your rent lower than this.
How Much Rent Can I Afford On $80k?
If you have no debt or other financial obligation then by the standard 30% rule you can afford $2,000 on rent each month.
How Much Rent Can I Afford On $70k?
Considering the standard 30% rule of thumb, on a $70k take-home pay you can afford $1,750 rent each month. However, if you have higher debt and other necessary expenses then you should spend lesser than 30% of your income on rent.
How much rent can I afford on 75k?
$75k yearly take-home pay means you earn $6,250 each month. 30% of that is $1,875 which means you can afford to spend $1,875 on rent each month if you have no debt.
How Much Rent Can I Afford On $65k?
You can afford $1,650 each month on rent if you have no other major financial obligation and have an after-tax income of $65k.
How Much Rent Can I Afford On $50k?
On a $50k yearly salary, you can afford $1,250 on rent each month. However, spending less than that will be better for your financial health.
Now that we have found out some ideal rents based on salaries. So, it’s time to look at some of the related queries.
Here are some of the frequently asked questions on this topic
Is 30% On Rent Too Much?
Whether or not 30% of your salary on rent is too much depends on your expenses and the cost of living in your area. Usually, it’s suggested not to spend more than 30% of your gross monthly income on rent. However, there are some cases where spending more than 30% of your income on rent may become necessary. For instance, if you live in a high-cost-of-living area, you may have to pay more for rent.
How Much Rent Can I Afford Making $25 an Hour?
On a $25 hourly salary, your monthly salary is approximately $4,000. 30% of $4,000 is $1,200. So, you should either spent $1,200 or less than $1,200 on rent. Otherwise, you might end up living paycheck to paycheck.
Is It Bad if Rent is Half Your Income?
Yes, it is bad if rent is half your income. This is because it leaves you with very little money to cover other essential expenses, such as food, transportation, utilities, debt payments, and savings. It is recommended to spend 30% or less of your gross monthly income on rent. However, if you are spending half of your income on rent, you only have 50% of your income left to cover other expenses. This can make it difficult to make ends meet and can lead to financial hardship.
How much you should spend on rent largely depends on your financial situation and living expenses. So, following any standard rule is not ideal. Find out how much you should spend on rent by considering your financial factors.
Just remember to not compromise on any necessary living expenses because of the urge to live in a better home.