How Much Rent Can You Afford?

There are a lot of considerations that come in to play when deciding to rent an apartment: locations, amenities, square footage, and most importantly, budget. How much rent you can afford to spend on a month to month basis is largely dependent on your income, as well as the other monthly expenses that eat away at your paycheck. And while it would be excellent if rent was negotiable based on what you think is reasonable or how much you are comfortable putting down, such is not the case—the price you see is the price that you have to pay, and it’s never a good idea to spend more in rent than you can afford.

Figuring out how much rent you can afford is part math problem, part common sense. Here are all of the considerations that you should keep in mind when trying to nail down a number.

How much of your income should go to rent?

You may have heard of the general rule of thumb here, which is that 30% of your monthly income should go to rent. If you make $5,000 a month at your job, that’s $1,500 that you can afford to spend in housing costs. (Another way to calculate this is to take your entire yearly income and divide it by 40.)

Though it may be conventional wisdom, there are some problems with the 30% rule—namely that it fails to account for debt. That $1,500 a month can be hard to swing if you’re also spending $1,000 a month on student loans.

Enter another rule: the 43% rule, also known as the debt-to-income ratio. Under this rule, your rent + any monthly loans that you’re paying off should not account for more than 43% of your monthly income. So if you have a $500 monthly student loan payment and a $200 monthly car payment, that $1,500 rent payment would get you to 44%—which is just over what you want to spend. Using the same monthly loan costs, how much rent you can afford would dip down just a little bit, to about $1,450.

Here’s a caveat though: lots of renters spend at least 30% of their monthly income on rent, and many spend significantly more. This is largely due to inflated rental costs in major U.S. cities, a product of low inventory, high demand, and consumer culture. Now whether it’s financially viable to shirk the rules is ultimately up to you, but in general, it’s never a good idea to take on a rent payment that is going to spread you thin every month. In addition to your debt-to-income ratio, also consider the amount you spend on essentials like food, as well as non-essentials like entertainment and clothing.

Rent prices in major U.S. cities

How much rent you’re going to be expected to spend every month is largely dependent on where you live—$1,500 is going to take you a lot further in an up and coming city like Minneapolis than it is in New York or Los Angeles. It will also take you further in the suburbs or out in the country than it will right in an urban center.

Here are the average rent prices for one-bedroom apartments in 10 U.S. cities, plus the amount you’d have to be making each month if you want to abide by the 30% rule. Rental data is provided by Apartment List and is current as of January 2023.

New York City
Average monthly rent cost: $2,131
Minimum monthly income required: $7,100

Los Angeles
Average monthly rent cost: $1,364
Minimum monthly income required: $4,550

Chicago
Average monthly rent cost: $1,078
Minimum monthly income required: $3,600

Washington D.C.
Average monthly rent cost: $1,340
Minimum monthly income required: $4,500

Seattle
Average monthly rent cost: $1,320
Minimum monthly income required: $4,400

Houston
Average monthly rent cost: $839
Minimum monthly income required: $2,800

Miami
Average monthly rent cost: $1,080
Minimum monthly income required: $3,600

Philadelphia
Average monthly rent cost: $973
Minimum monthly income required: $3,250

Atlanta
Average monthly rent cost: $1,030
Minimum monthly income required: $3,450

Denver
Average monthly rent cost: $1,060
Minimum monthly income required: $3,550

Keep in mind that these monthly rent costs are averages, and may not reflect what you actually find to be available when you start your search. To determine how much rent you can afford to spend in your town or city, start your rental search and try to come up with an average price point based on what you see. You may find out that the actual inventory of apartments runs higher or lower than the numbers displayed above.

Other costs to consider

When it comes to rental housing costs, rent is, of course, the big one that you have to take into account. But it’s not the only one. When you are planning out your housing budget, be sure to factor in other major costs associated with renting, including (but perhaps not limited to):

Security deposit. A security deposit is a fee collected by your landlord to cover any incidental damages that take place while you live in your apartment. Landlords are expected to hold this money for you in an interest bearing account, so that when you get the security deposit back when your lease period is over you also get a little bit extra (though it’s probably not going to be much). Reasons for your security deposit to be withheld at the end of your lease period include damages to the unit or extensive cleaning requirements before the unit is inhabitable for the next tenant.

Move-in fees. Some landlords and/or building management companies charge a move-in fee that must be paid prior to occupancy. Sometimes this fee is in lieu of a security deposit, though not always. And unlike a security deposit, it is not refundable at the end of your tenancy.

First and/or last month’s rent. This is one of the biggest barriers in the market for potential renters, but it’s not always avoidable, especially in areas with high renter demand. These fees are generally due at the same time, and can be incredibly difficult to procure if you haven’t been saving for them.

Utility costs. The cost of living in your apartment goes beyond just rent. While the exact utilities you will be responsible for paying depend on what you agree to in your lease, you may be expected to pay monthly costs for things like water, gas, heat, electricity, internet, and garbage pick-up.

Moving fees. One last thing to tack on when you’re trying to decide how much rent you can afford is moving fees, which, depending on how far and how much stuff you’re moving can cost anywhere from a hundred bucks to a couple thousand. Here are the costs you need to factor in to your moving budget, plus nine easy ways to cut down on your moving costs.

What if rent is just too high?

If you’re looking at all of this and wondering how it’s going to be possible for you to ever rent an apartment, you’re not alone. There’s a reason that millennials have come to be known as the boomerang generation, opting out of rent payments and moving back in with their parents instead. And in fact, if it’s an option for you, spending some time camping out in your childhood bedroom is a great way to save the money that you need to finally rent your own place.

If moving back home isn’t appealing or isn’t an option, however, there are other options:

Expand your search area. While everyone wants a short commute to work and easy access to the places and resources they rely on most often, it’s not always tenable to work those assets in to your rental budget. If you can’t afford the rent exactly where you want to live, expand your search to neighboring areas and see if rent is more reasonable there. You may have to allot a bit more cash to transportation, but if you’re truly motivated then you can make it work.

Get a roommate. Remember that the average apartment costs listed above are for one bedroom apartments. Rental prices for two bedrooms in the same cities are often not much higher, and can be split between you and somebody else instead of you having to take on the entire burden by yourself. And thanks to the internet, there are plenty of ways to find a roommate online that don’t require you to know of somebody who is already out there looking.

The amount that you can afford to spend on rent depends on your individual financial situation and the cost of living where you reside. If you can, give yourself plenty of time to research available apartments so that you can be sure you find your best financial fit. It may be helpful to work with an apartment agent, who can make a list for you of rental spots that align with your budget. It’s free to use an apartment agent (they get paid a referral fee from your new landlord or management company once your lease is signed), so you don’t have to worry about taking on yet another cost associated with your move.