1. What is the Rent Affordability Rule?

The Rent Affordability Rule suggests that you should spend no more than 30% of your gross monthly income on rent. This is a common guideline used by landlords and financial advisors to determine housing affordability.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Rent \) — Affordable monthly rent payment
• \( Income \) — Your gross monthly income
• \( 0.3 \) — The 30% affordability threshold

Explanation: This calculation helps determine the maximum rent you can afford while maintaining financial stability.

3. Importance of Rent Affordability

Details: Maintaining rent within 30% of your income helps ensure you have enough money left for other essential expenses, savings, and discretionary spending.

4. Using the Calculator

Tips: Enter your gross monthly income (before taxes) in your local currency. The calculator will show the maximum recommended rent payment.

5. Frequently Asked Questions (FAQ)

Q1: Is the 30% rule before or after taxes?
A: The 30% rule typically applies to gross income (before taxes), though some prefer to use net income for a more conservative estimate.

Q2: What if my rent exceeds 30% of my income?
A: You may need to adjust other expenses, find roommates, or consider more affordable housing options to maintain financial health.

Q3: Does this include utilities?
A: The 30% rule traditionally refers to rent alone. Many experts recommend keeping rent + utilities under 35-40% of income.

Q4: Is this rule applicable worldwide?
A: While widely used, local housing markets may require adjustments. In high-cost areas, people often exceed this guideline.

Q5: How does this relate to debt-to-income ratios?
A: Lenders often use 28/36 rule: 28% of income for housing, 36% for total debt (including housing). This is more conservative than the standard 30% rule.