How the Rent Calculator Works
The Rent Calculator answers two common questions. First: how much rent can I afford? Second: what does a place I am looking at really cost each month once utilities, insurance and fees are added, and once the rent is shared? Pick the question at the top of the calculator and fill in the boxes that appear.
Question 1: how much rent can I afford?
You enter your monthly income before tax, your monthly debt payments and the share of income you want to spend on housing. The calculator then uses two well-known guidelines and keeps the stricter one:
- The income rule: spend no more than a set share of your income on housing. 30% is the most common choice. This calculator also offers 25%, 28%, 33% and 35%.
- The 36% debt limit: housing costs plus all your debt payments should stay under about 36% of your income.
housing budget = the smaller of: income x chosen share income x 36% - monthly debts rent you can afford = housing budget - utilities - renter's insurance / 12
The calculator counts utilities and renter's insurance inside the budget, because they are part of what you pay to live there. It also shows the income many landlords ask for, which is often 3 times the monthly rent.
A worked example
You earn $5,000 a month before tax and pay $400 a month toward debts. You choose the 30% rule. Utilities are $150 a month and renter's insurance is $180 a year, which is $15 a month.
| Step | Amount |
|---|---|
| Budget by the 30% rule | $1,500 |
| Budget by the 36% debt limit ($1,800 - $400) | $1,400 |
| Housing budget (the smaller one) | $1,400 |
| Utilities and insurance | $165 |
| Rent you can afford | $1,235 a month |
| Income landlords may ask for (3 x rent) | $3,705 a month |
Chart: where the income goes
The same example. Each block is about the same share of your $5,000 income:
Rent █████████████████ $1,235 (25%) Utilities, insurance ██ $165 (3%) Debts █████ $400 (8%) Left over ████████████████████████████████████████ $3,200 (64%)
Question 2: what does my rent really cost?
Here you enter the total rent for the home and the other monthly costs: utilities, renter's insurance, parking, pet rent and any other fees. If you share the home, enter how many people share it, and the calculator splits everything equally. It also adds the cash you need to move in:
your monthly cost = (rent + utilities + insurance / 12 + parking + pet rent + fees) / people move-in cash = (rent x (1 + deposit months) + one-time fees) / people
If you add your income, you also get the share of it that goes to housing.
A second example
Three friends rent a house for $3,000 a month. Utilities are $150 a month and insurance is $180 a year. The whole household pays $3,165 a month, so each person pays $1,055. One month of deposit and $100 of fees means each person needs about $2,033 to move in. For someone earning $4,000 a month, $1,055 is 26.4% of income.
What the share of income means
- 30% or less: within the usual guideline.
- Above 30%: housing experts call this cost-burdened. It leaves less for food, transport, saving and emergencies.
- Above 50%: severely cost-burdened. This is hard to keep up for long.
Good to know
- These are guidelines, not laws. In a costly city, you may need to go above 30%. If you have no debt and low bills, you may be able to spend more.
- The calculator uses income before tax. If you think in take-home pay, keep the share lower.
- Utility costs vary with the season. Use a yearly average, if you can find one.
- Some places also charge a pet deposit, renter's fees or a rent increase at renewal. Check the lease.
This tool gives an estimate for general information only. It is not financial advice. Your lease and your landlord's requirements are the ones that count.