Understanding what you can afford to rent

How much should you spend on rent? The answer will likely depend on your financial situation.


One of your first steps in the rental process is making sure you have a firm handle on your finances. Knowing what you earn, spend and have in savings will help you set realistic expectations for how much monthly rent you can afford.

The best way to get started is by tracking your finances and creating a budget. To help you begin, use our interactive budgeting tool to compile a list of your monthly expenses.

So, how much should you spend on rent? The general rule of thumb is to spend no more than 30% of your take-home income on housing-related expenses, but everyone’s financial situation is unique.

That's why it's important to understand how your expenses fit into your budget. You'll quickly get a sense of your essential and non-essential spending habits. At the end of the day, think about your individual financial goals and savings plan to decide how much you can afford to spend on rent.

The costs of renting

Your monthly housing payment is only one of the housing-related costs you should factor in when deciding where to live. You should also budget for up-front and recurring costs.

  • number 1

    Upfront costs

    • Application fee. Landlords may charge this fee to cover the administrative costs associated with verifying your income, employment, financial and rental history, and references. If you apply to multiple properties, these fees can add up quickly.

    • Security deposit. Most landlords will require about one month’s rent up front, which is usually refundable, as long as you pay your rent on time and in full and do not damage the property.

    • Pet deposit or fee. If you have a pet, you may have to pay a pet deposit. Additionally, some landlords may charge a monthly fee for you to keep your pet.

    • Move-in fee. This non-refundable fee typically covers turnover costs such as changing the locks or updating building directories.

    • Moving costs. Whether you're moving across town or across the country, the cost of transporting your belongings to a new home can add up quickly.

  • number 2

    Recurring costs

    • Utilities. Utilities include electricity, gas, water, cable and internet. Some (or all) of your utilities may be included in your rent.

    • Renters insurance. For a relatively low monthly cost, you can insure all the belongings in your home against damages caused by circumstances beyond your control. Some landlords require you to have renters insurance, but even if it's not required, renters insurance is still a good idea.

    • Parking fee. Depending on where you live, the cost of a monthly parking spot can significantly increase your monthly housing cost.

    • Amenities fee. Some rental communities charge for amenities such as an on-site gym or pool. You’ll be charged whether you use these amenities or not.

    • Yard maintenance. If you rent a single-family home or townhome, you may be responsible for the upkeep of the yard.

    • Rent increases. Your rent will likely increase over time with inflation.

    Be sure to talk with your landlord about all anticipated costs throughout your renting process. The more familiar you are with the fees and costs you need to pay, the better off you’ll be.

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Preparing to rent