Calculate Your Ideal Rent
Moving into your first apartment? Thinking about upgrading to a larger place or moving to another neighborhood? It can be daunting to determine exactly how much you can commit to spending for the next 12 months (or maybe longer). If you’re not aware of the numbers, you could be wasting your time applying for something you’ll end up being denied for.
These free online tools are a great way to help filter through the options to find what best fits your lifestyle.
Domu (an apartment rental listing service in Chicago) is built on a general consensus of what the average American can afford given their annual after-tax income today. It does not take into account where in the country you want to live, other expenses, or debt.
- A conservative estimate for how much you might budget for rent is 15% of your income, allowing for other additional expenses and leaving more available for travel and entertainment
- A middle of the road estimate reserves 25% of your income for an apartment that might be a little larger or nicer while still leaving enough for debt and expenses
- At the high end of the spectrum is a 35% rent commitment for those that have a stable income or additional sources of cash flow and for whom housing is of prime importance
Zillow’s calculator takes into account your monthly net income, debt expenses and how much you want to set aside for savings or retirement as well as where you live. There is also a sliding button that allows you to set how much you want to allocate for housing (from 10% to 40%) and will then tell you how much under or over budget you are given all of your parameters. The tool assumes a tax bracket of 25%.
This tool also uses annual, pre-tax income to determine what you can afford on rent. The tool assumes a tax rate of 23%. You are then offered three levels of rent:
- A Suggested Minimum which might not provide all that you want or need in a living option
- A “Sweet Spot” which suggests what you can comfortably spend on rent while still having enough to spend on other common living expenses and set aside something for savings
- A Suggested Maximum which tells you what might be at the top of your limit without going over, but definitely requiring a very strict budget and introducing the risk of not having anything left over for emergency situations
This calculator asks for your weekly or monthly after-tax income as well as roommate status. Only one rent estimate is offered based on guidelines set by the U.S. Department of Housing and Urban Development, which suggests a 30%-of-income limit, plus an additional 10% for their assertion that 40% is still likely reasonable for most people. It also offers as a baseline of what Section 8 of the Housing Act of 1937 offers low-income households in rent vouchers (up to $2,200) and the statistic that in 2013, the typical American spent $60/week/person in groceries.
All of these tools return slightly different results so it is a good idea to test out several to get a good feel for your situation. Be sure to also check out our tips on budgeting expenses.