PortioOpen appGuides · By the Portio team ·
How much rent can you afford? Rent calculator
A common limit is to keep rent at or under 30% of your income: on a salary of 3,000, that is 900. The better test is what is left after the rent is paid. If your other bills, food, savings and debts still fit, you can afford it. If they do not, the rent is too high, whatever the percentage says. Check a rent against your own salary below.
- Rent30%900
- Everything else70%2,100
This rent takes 30% of your income, within the usual line of 30% (900). 2,100 is left for bills, food, saving and the rest.
Read the full guide
Where does the 30% rule come from?
From housing policy in the United States. A 1969 law limited rent in public housing to 25% of a household's income, and the limit was raised to 30% in 1981. Banks and landlords then started using the same line for everyone.
It is a line drawn for a policy, not a law of personal finance. Treat it as a first check.
Is that 30% of my pay before or after tax?
The original rule uses income before tax. Use the amount that arrives in your account instead. It is stricter, and it is the only money you can pay rent with.
When is 30% the wrong number?
- On a low income. 30% of 1,200 is 360 and leaves 840 for everything else. 30% of 6,000 is 1,800 and leaves 4,200. The same percentage, two very different months.
- When your other costs are high. With a car, debts or people who depend on you, aim nearer 25%.
- When the rent replaces other costs. If it includes power and water, or the home is close enough to walk to work, compare rent, bills and transport together.
- In an expensive city. Many people pay 40% or more. It can work, but another line pays for it, usually savings. Know which one.
How do I test a rent before I sign?
Work out what is left. Here are three rents on a salary of 3,000, with 5% giving and 150 of other bills:
| Rent of 750 | Rent of 900 | Rent of 1,200 | |
|---|---|---|---|
| Share of the salary | 25% | 30% | 40% |
| Giving | 150 | 150 | 150 |
| Other bills | 150 | 150 | 150 |
| Left for food, goals and the rest | 1,950 | 1,800 | 1,500 |
The home at 1,200 costs 300 a month more than the one at 900. That is 3,600 a year. A spare room or a short commute may be worth 3,600 to you. Decide with that number in front of you, not the monthly one.
Then check that the amount left covers your month. Divide it by 30 for a quick view: 1,500 is 50 a day for food, transport, savings and debt together. The method is in why your salary runs out.
What does a home cost besides the rent?
- To move in: a deposit, often one to three months of rent, agency fees, the move itself and furniture.
- Every month: power, water, internet, building charges.
- Because of where it is: transport to work, parking, a second vehicle.
Ask to see earlier bills for the home. Add the monthly costs to the rent before you run the test.
What if my rent is already too high?
In order of effect:
- Negotiate at renewal. A tenant who pays on time is worth keeping. Asking costs nothing.
- Share the cost with a flatmate.
- Move when the lease ends. Count the cost of moving: a rent 200 lower pays back a 1,000 move in five months.
- Raise your income.
Until then, lower your savings percentage for a while. A smaller plan that adds up is better than a plan you give up on.