Home
Back
Rent Affordability Formula:
| From: | To: |
The Rent Affordability Percentage measures what portion of your monthly income goes toward rent. Financial experts typically recommend spending no more than 30% of your income on housing.
The calculator uses the simple formula:
Where:
Explanation: The equation calculates what percentage of your income is being spent on rent each month.
Details: Maintaining an appropriate rent-to-income ratio helps ensure financial stability, allows for savings, and prevents being "house poor" with little left for other expenses.
Tips: Enter your monthly rent and gross monthly income (before taxes). Both values must be positive numbers.
Q1: What is the recommended rent affordability percentage?
A: Financial experts typically recommend spending no more than 30% of your gross income on rent.
Q2: Should I use gross or net income for this calculation?
A: The standard calculation uses gross income (before taxes), but you can calculate both ways to see your after-tax percentage.
Q3: What if my percentage is above 30%?
A: You may be considered "rent burdened." Consider finding cheaper housing, increasing income, or adjusting other expenses.
Q4: Does this include utilities and other housing costs?
A: The basic calculation is just for rent. For a complete picture, you might want to include utilities, insurance, etc.
Q5: How does this differ for homeowners?
A: For homeowners, similar calculations are done with mortgage payments, but should also include property taxes and insurance.